A New York City attorney has moved to squash what he called "baseless rumours'' surrounding the business empire of Bermuda resident Dr. Wolfgang Flottl.

Mr. Ted Altman has made it clear that his client will take legal action against rumourmongerers, if it continues.

Dr. Flottl, the owner of fund management companies Ross Capital Markets and International Asset Management, has been at the centre of controversy concering his companies involvement investment transactions with the Austrian Bank fur Arbeit und Wirtschaft (Bawag), of which his father, Mr. Walter Flottl, is chairman.

The relationship, which lasted six years and involved loans to Dr. Flottl's companies from his father's bank, is still under investigation by Austrian bank regulators.

Mr. Altman, of the law firm Gordon, Altman and Butowsky of Manhattan commented: "It is exasperating to see a lot of baseless rumours going around.'' Mr. Altman was commenting on reports that Ross Capital Markets Ltd. was facing liquidation.

Mr. Altman responded yesterday: "It has no basis. I know where the rumour came from and it is totally baseless. I have heard it from another source.

"It does not excite me, this type of rumour. It does excite me that someone is putting out stories that are palpably false. It is inappropriate.'' Ross Capital Markets has been already on the defensive against rumours that staff were being laid off.

Mr. Altman, who represents Ross Capital and Mr. Flottl's other Bermuda companies, said he was aware that there were untrue stories that Mr. Flottl was facing financial problems.

The scandal in Austria deepened last week when major international banks isolated Bawag, the third largest bank in the country.

Last month, Bankers Trust cut its inter-bank lines with the Bawag bank and a $100-million line of credit because it was uncomfortable with the bank's dealings with Dr. Flottl's companies. Five other banks were also said to have cut their ties to the Austrian institution.

This happened after Mr. Flottl agreed to repatriate the Austrian money.

Speculators reasoned that if his son, Dr. Flottl, was forced to move the money back at short notice, he could suffer a money shortage.