Yesterday, Morgan Stanley was ordered by a Florida jury to pay investor Ron Perelman an additional $850 million bringing the total to $1.4 billion in damages.
Monday, Morgan Stanley was ordered to pay $604 million at which point it said that it would reassess the amount of funds it had set aside for Perelman’s lawsuit. Since this additional $850 million was tacked on, it would seem that they would 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%.
Morgan Stanley is confident that it can successfully appeal this verdict. The company has 30 days to do so. The appeal would be heard by Florida’s Fourth Circuit Court. As Reuters says,
Analysts say some unusual circumstances of the trial mean Morgan Stanley probably can get the verdict overturned and pay as little as nothing. Morgan’s shares rose 2.5 percent to $50.15 in afternoon trade Thursday.
“They’ll move to settle this thing rapidly. It won’t have a big impact on the stock,” Punk Zeigel analyst Dick Bove said. “This verdict is just one of those wacky numbers from a group of people who have no sense of reality. Perelman could lose all of this $1.4 billion, so the pressure is on him to settle.”
“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.”
Purcell is sure facing his share of problems. He already has a group of the company’s shareholders at his throat and fighting to get him out of the company.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
