Morgan Stanley was ordered today by a Florida court to pay an additional $850 million to billionaire investor Ron Perelman. This brings the total to $1.4 billion in damages.
The other day, Morgan Stanley said it would reassess the amount of funds it had set aside for Perelman’s lawsuit after being ordered to pay $604 million. Now that this additional $850 million has been tacked on, I would imagine that they will have to reassess that amount again.
Last month the company raised the money it had reserved for the lawsuit from $100 million to $360 million. This cut its first-quarter results down by 4%. Reuters explains a little about the history of the case:
On Monday a West Palm Beach, Florida, state court jury concluded the bank helped persuade Perelman, a billionaire investor and chairman of cosmetics maker Revlon Inc. (REV.N: Quote, Profile, Research) , to sell camping equipment maker Coleman (Parent) Holdings Inc. to a Morgan client, Sunbeam Corp. for $1.5 billion in stock and cash in 1998.
The appliance-maker later went bankrupt after it was learned Sunbeam inflated its results through fraudulent accounting. Perelman’s $680 million of Sunbeam shares plunged in value.
“This court has done a great injustice to the employees and shareholders of Morgan Stanley,” said Morgan Stanley CEO Phil Purcell. “We will fight to have this decision overturned, and we fully expect to prevail. Morgan Stanley is financially strong and this latest development, while disappointing, will not impede our ability to serve our clients and grow our business.”
It seems that a storm cloud is just following Mr. Purcell. He already has a group of the company’s shareholders at his throat and fighting to get him out of the company. When it rains it pours.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
