Newspaper article The Evening Standard (London, England)

Surviving the Collins Kerfuffle; City Comment

Newspaper article The Evening Standard (London, England)

Surviving the Collins Kerfuffle; City Comment

Article excerpt


WHEN Callum McCarthy took over as chairman of the Financial Services Authority on Monday he could scarcely have thought the first highprofile case on his watch would be that of a disgruntled analyst making accusations against his erstwhile employer Collins Stewart Tullett and its hard-driving boss Terry Smith. If McCarthy had wanted to be a counsellor, he could have joined Relate.

The FSA was set up to keep markets honest, fight financial crime and protect and educate customers.

Obviously it has to look at the Collins Stewart allegations, but it is treading a fine line because as a general principle it must seek to avoid getting involved in disputes between firms and their employees. Heaven help the City if everyone with a beef against their boss decided to invoke the regulator as a kind of Human Resources Star Chamber.

Yet if any of the new generation of investment houses was going to get caught in the headlights without doing anything wrong, it was Collins Stewart.

The firm floated on the stock market-for almost three times the price at which it had been bought out from Singer & Friedlander barely six months before, which did not please them much. It was one of the big players in the disastrous exploitation of the market for splitcapital trusts, which has not thrilled the regulator. It was also one of the most successful houses in bringing companies to market in the recent troubled times, which has not thrilled everyone who bought such shares. But in business terms it has been a major success and aroused in the City a toxic mixture of envy and respect, awe and active dislike.

Smith drives the firm hard - but that of itself is no business of the regulators, and should not be. But no one emerges from these things totally unchanged. One consequence of this affair may still be that the Collins Stewart board will seek to tone him down and beef up the management underneath him.

Collins Stewart having its own distinct culture, there should be no risk that other new firms will suffer in the slipstream of the row. This is important because the successful establishment of such firms is an important sign of the City's ability to regenerate itself. …

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