WEST PALM BEACH - A Florida jury yesterday raised to US$1.45 billion ($2.05 billion) the total damages it ordered Morgan Stanley to pay Ronald Perelman for conspiring to defraud the billionaire investor in a 1998 business deal.
The six-man, three-woman jury took four hours to decide to add US$850 million
in punitive damages to US$604 million it had already awarded Perelman over the sale of his camping equipment company, Coleman Co, to appliance-maker Sunbeam Corp.
The Wall St bank repeated its intention to appeal the verdict as well as the punitive damages award. But at least one analyst expected the bank to take a charge to cover the costs, trimming second-quarter earnings.
"This court has done a great injustice to the employees and shareholders of Morgan Stanley," said the investment bank's chief executive, Philip Purcell. "We will fight to have this decision overturned and we fully expect to prevail."
Morgan Stanley shares fell 37c to US$48.55 in trading after the bell on the New York Stock Exchange on Wednesday.
Perelman, chairman of cosmetics company Revlon, sold Coleman for US$1.5 billion in cash, assumed debt and Sunbeam stock, but the shares soon became worthless when it was revealed that Sunbeam's accounts were based on large-scale fraud. Sunbeam filed for bankruptcy in 2001.
Perelman had sought US$2.7 billion from Morgan Stanley, which he accused of helping Sunbeam to deceive him about the true nature of its finances. Morgan Stanley was working for Sunbeam at the time.
Morgan Stanley said it believed it had multiple grounds for appealing the verdict.
- REUTERS
