By: (AP)A British judge ruled Wednesday that the bulk of a brokerage firm's 240 million pound ($433 million) damages claim against the Financial Times newspaper cannot proceed.
The brokerage, Collins Stewart Tullett PLC, claims some articles the paper published, based on accusations by a former employee, were defamatory and inaccurate.
Collins Stewart is seeking special damages equal to the loss in its market capitalization between the first of the stories in August of last year and March -- estimated at some 230.5 million pounds ($416 million).
But Justice Michael Tugendhat ruled in the High Court that the special damages claim couldn't proceed. "I have decided that the claimants cannot win on this part of their claim, and that a trial of that issue would be a waste of time," he said.
The FT welcomed the ruling. "It would be a very dark day for journalism and for a free press if publishers were to be held liable for a drop in share price following publication of an article reporting on company events," FT editor Andrew Gowers said.
The FT articles concerned accusations of conflict of interest by a former Collins Stewart analyst, James Middleweek. He said the brokerage pressured its analysts to support the firm's corporate-finance business, including deals in newly issued shares of low quality.
He made the accusations in a report to the Financial Services Authority, Britain's financial watchdog agency. That report was part of a lawsuit filed by Middleweek, who claimed he was wrongfully fired and that he was punished for being too evenhanded.
Collins Stewart denied the charges and accused Middleweek of blackmail.
The brokerage is also seeking damages against the FT for loss of business and other financial loss. Tugendhat said that claim could proceed.
The FSA announced in August that it had closed its investigation into Collins Stewart prompted by Middleweek's allegations.
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