Irish Nuns, Investors Sue Morgan Stanley in London for Not Selling Notes
By Lindsay Fortado - Aug 11, 2010 7:01 PM ET
Morgan Stanley was accused of taking a profit for itself and failing to sell notes when it should have in a lawsuit filed by nuns, a veterinary fund and 85 other Irish investors.
Morgan Stanley and Saturns Investments Europe Plc, a special-purpose vehicle set up by the New York-based bank, “deliberately or carelessly failed to redeem the notes” when they were downgraded to junk in January 2009, according to a statement by Stewarts Law LLP, the lawyers for the investors.
The bank and Saturns waited until June 2009, after the price of underlying bonds had risen significantly, to redeem the notes, “thereby securing Morgan Stanley a profit of at least $11.2 million on the sale of the notes by way of a termination payment,” the lawyers said. The notes were sold to “a related Morgan Stanley entity” at a profit, they said.
The Sisters of Charity of Jesus and Mary, the Holy Faith Sisters, the Irish Veterinary Benevolent Fund and other individual investors bought 5.88 million euros ($7.6 million) of the notes through the stockbroker Bloxham in 2005 and 2006. The investors filed the suit on Aug. 10 in London, according to Stewarts Law. They are seeking damages of more than 15 million euros.
Morgan Stanley spokesman Michael Wang declined to comment.
The case is The Sisters of Charity of Jesus and Mary v. Morgan Stanley & Co, 2010/960, High Court of Justice, Queen’s Bench Division (London).
To contact the reporter for this story: Lindsay Fortado in London at lfortado@bloomberg.net.
Next week’s headline
Convent foreclosed. Gunned down Nuns now happily with their Savior.
Be interesting to see a breakdown of secular vs non-secular foundations and funds that were impacted - whether the merchant used his dishonest scales indiscriminately or... with an ideological / sectarian bias.