Morgan Stanley was ordered to pay investor Ron Perelman $604 million, and said it is now reassessing the amount of funds it has set aside for this expense.
Last month the company put 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 intends to appeal the verdict. It looks like the company is going to have to set aside quite a bit more if its appeal is unsuccessful. 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.
They say that the main reason Morgan Stanley lost this case is because it failed to keep records related to the affair, and therefore couldn’t deliver them in court.
The judge was not pleased by Morgan Stanley’s lack of documentation, and the jury had no choice but to assume that Perelman needed these records as well. The company’s shares dropped 9 cents today in early trading.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
