The Collapse of the Small-Cap Market

Desperate efforts are being made to rescue the stricken small-cap broker and AIM Nomad Seymour Pierce. It is likely that they will fail because any new capital will be swallowed by redundancy costs. Seymour Pierce has far too many staff. The most likely outcome is some sort of receivership deal. The industry has known about the situation for many months. Presumably the Financial Services Authority has been happy to let Seymour Pierce carry on trading.

Not so long ago they were the King of our sector. Their reputation was built on an ability to raise funds for their clients (which is actually the purpose of capital markets). Then they lost their Chief Executive Richard Feigen in undisclosed circumstances.

This was followed by the period of austerity, the charge of the regulators, a collapse in the new issues market and a loss of some key staff.

The likely demise of Seymour Pierce is another hammer blow to the prospects of the small-cap community. Will anybody care? The answer is “no” and that is what should worry us the most.

Allister Heath, the editor of CityAM, is one of the most incisive financial writers in the City. However, even by his high standards, his article, written as a guest in the ‘Daily Telegraph’ (30 January 2013), was exceptional.

Mr. Heath introduced his three proposals with the following words:

There is no attitude more shameful and debilitating than defeatism….”

He continued by refusing to accept that “unimaginative economists and cowardly politicians” represent the best Britain has to offer. He proposed a three points plan to revive the UK economy:

a) reduce corporation tax to 11% (Ireland is 12.5%)

b) abolish capital gains tax

He calculates that these two measures will cost the Treasury £25 billion. He would pay for this by

c) increasing real spending cuts from 1% to 1.5% – 2% in the current year.
None of this will happen but it’s good to know that there is somebody out there a cut above the rest.

1 comment for “The Collapse of the Small-Cap Market

  1. Richard Hoblyn
    5 February, 2013 at 13:03

    Seymour Pierce wont be the last as it probably number 200 on the extermination list since 1986. The whole PCIAM sector is being crushed by RDR, excessive capital requirements and a lack of imagination and judgment. So many firms are being bombarded by bankers supporting RDR whilst real market practitioners are gradually getting extinguished. If the gov & regulator supports Qualification over Experience this is the end result. Hasta la vista SP……RIP the old ideals of the market.

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