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Irish nuns sue banks for millions
Irish nuns are suing Morgan Stanley and Deutsche Bank for misleading them into buying bonds and incurring losses of €5m.
The rather noticeable case of Sisters of Jesus and Mary vs. Morgan Stanley' was filed at the High Court this week bearing the names of 88 investors, including the Sisters of Charity of Jesus and Mary, the Holy Faith sisters and the Irish Veterinary Benevolent Fund.
The nuns allege that between January 2005 to December 2006, they were convinced to buy €5.9m worth of so-called 'Hybrid Structured euro constant maturity swap notes' for promised steady returns of 6.25% a year for four years.
Promises made
They claim Morgan Stanley contractually assured them that the bonds would be sold immediately if downgraded to a certain level. Deutsche Bank was named as the custodian of the deal.
By January 2009, the bonds were downgraded to junk status by Standard & Poor's. However according to the prosecution, instead of fulfilling its alleged promise, Morgan Stanley waited five months before selling the bonds.
It is suggested that the bank made $11.2 m in the delay. But by then, the bonds were worth less than 20% of what the plaintiffs had paid.
Test case
This may prove an interesting test case and no doubt the likes of Goldman Sachs will be watching intently as if it is successful (which is a big 'if") then it may be followed by a long chain of similar law suits.
One suspects that Morgan Stanley will defend itself robustly and it is undeniably a company with influence and power but then the Vatican has been known to have deep pockets and friends in high places too. One assumes that the nuns will have the full backing of the church and this may prove persuasive.
http://www.dailyfinance.co.uk/2010/0...-for-millions/
Irish nuns are suing Morgan Stanley and Deutsche Bank for misleading them into buying bonds and incurring losses of €5m.
The rather noticeable case of Sisters of Jesus and Mary vs. Morgan Stanley' was filed at the High Court this week bearing the names of 88 investors, including the Sisters of Charity of Jesus and Mary, the Holy Faith sisters and the Irish Veterinary Benevolent Fund.
The nuns allege that between January 2005 to December 2006, they were convinced to buy €5.9m worth of so-called 'Hybrid Structured euro constant maturity swap notes' for promised steady returns of 6.25% a year for four years.
Promises made
They claim Morgan Stanley contractually assured them that the bonds would be sold immediately if downgraded to a certain level. Deutsche Bank was named as the custodian of the deal.
By January 2009, the bonds were downgraded to junk status by Standard & Poor's. However according to the prosecution, instead of fulfilling its alleged promise, Morgan Stanley waited five months before selling the bonds.
It is suggested that the bank made $11.2 m in the delay. But by then, the bonds were worth less than 20% of what the plaintiffs had paid.
Test case
This may prove an interesting test case and no doubt the likes of Goldman Sachs will be watching intently as if it is successful (which is a big 'if") then it may be followed by a long chain of similar law suits.
One suspects that Morgan Stanley will defend itself robustly and it is undeniably a company with influence and power but then the Vatican has been known to have deep pockets and friends in high places too. One assumes that the nuns will have the full backing of the church and this may prove persuasive.
http://www.dailyfinance.co.uk/2010/0...-for-millions/
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