Morgan Stanley Faces Document Suit
CNN MONEYMorgan Stanley Faces Document Suit
Newly discovered records lead law firms to seek $100 million in damages from Wall St. firm. May 7, 2005: 12:36 PM EDT
NEW YORK (Dow Jones) - A Florida law firm has sued Morgan Stanley, seeking $100 million in damages from the Wall Street firm for failing to provide disgruntled clients with evidence that may have been relevant in hundreds of past arbitration cases.
The purported class-action suit comes in the wake of Morgan Stanley's acknowledgment last month that it has found electronic tapes that potentially could contain documents that would have been of interest to plaintiffs who claim they received faulty stock-research and investment advice from Morgan Stanley .
The lawsuit, filed last week in a Florida court and served on Morgan Stanley(Research) on Thursday, alleges that the Wall Street firm violated contracts with clients by not giving them access to the recently discovered documents. It seeks to represent as a class all people who filed arbitration claims against Morgan Stanley since 1999.
Darren C. Blum, the Coral Springs, Fla., lawyer whose firm filed the suit, said he has signed up "dozens" of clients but sees the class-size ultimately expanding to about 1,000.
A Morgan Stanley spokeswoman wasn't immediately available to comment Friday.
In addition to the $100 million in compensatory damages and unspecified punitive damages, the lawsuit seeks to reopen cases that New York Stock Exchange and NASD arbitration panels have ruled on involving Morgan Stanley since 1999.
Morgan Stanley said it recently discovered the potential evidence as it reviewed its email-retention policies as part of financier Ronald Perelman's fraud suit against Morgan Stanley.
In a letter last month to lawyers who had represented plaintiffs in arbitration cases, an outside attorney for Morgan Stanley wrote that the firm "has recently come to appreciate that there are additional sources that might contain additional responsive email. ... It will take an as-yet-unknown period of time to determine if there is email or other electronic data from those sources" that should have been turned over during the discovery process in the arbitration cases.
The letter outraged some plaintiffs' attorneys, who say they long-suspected that Morgan Stanley wasn't being forthcoming with disclosures.
"Morgan Stanley's actions demonstrate a history of discovery abuse preventing plaintiffs from obtaining a full and fair hearing," the lawsuit asserts. "Morgan Stanley has abused the arbitration process for years, and has violated the discovery rules repeatedly."
-By David Enrich, Dow Jones Newswires; 202-862-1340; email@example.com