Barry Townsley takes case against Dawnay Day tycoon to appeal court

London

The veteran stockbroker Barry Townsley, best known outside the City for becoming embroiled in the cash-for-honours controversy, is to take his claim for damages against his onetime friend and business partner Guy Naggar to the court of appeal.

Naggar, the fallen property and investment tycoon whose sprawling £2bn Dawnay Day empire collapsed in 2008, had been a major customer of Townsley's brokerage, now called Hobart Capital, as well as part owner.

The dispute between the two stems from an ill-fated bet that the share price of F&C Asset Management would rise. This disastrous derivatives position sparked the downfall of Dawnay Day and caused turmoil for F&C, a FTSE 250 fund manager, wiping almost 30% off its shares in a day.

It emerged in court that an unnamed short seller had flooded the market with F&C shares, eventually making a fortune as Dawnay Day went into meltdown, selling a stake of about 20% at the distressed price of 100p a share.

Townsley claimed he had to buy out Dawnay Day's share in the brokerage and inject millions from his private funds to save the business and prevent clients being hit with losses.

He accused Naggar of acting as a shadow director, rather than a customer, of the brokerage firm and using the company to pursue an F&C investment strategy for his own ends without appropriate regard to the risks.

Townsley became a recognised figure outside City circles when he was embroiled in the cash-for-honours row after he agreed to lend funds to Labour and gave a further donation to Tony Blair's city academy programme. He was nominated for a peerage in 2005 but later withdrew, blaming media attention.

Powered by Guardian.co.ukThis article was written by Simon Bowers, for The Guardian on Friday 12th July 2013 19.04 Europe/London

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