Sunday 19 November 2017

It's God v US bank as Irish nuns sue in junk bonds row

Thomas Molloy

Thomas Molloy

GOD will take on mammon in a London courtroom after a group of Irish nuns launched a legal action against the mighty US investment bank Morgan Stanley in a dispute over investments which have gone sour.

The Sisters of Charity of Jesus and Mary, the Holy Faith Sisters, the UCD-based Irish Veterinary Benevolent Fund and more than 80 other Irish investors have joined forces to sue the US investment bank which made a profit of almost €2bn in the previous three months, documents filed in the High Court in London reveal.

The legal action, titled "The Sisters of Jesus and Mary versus Morgan Stanley" relates to investments bonds sold by Bloxham Stockbrokers to clients in Ireland.

Investors, who also included some credit unions which have taken separate cases in the Irish courts, have seen the value of the so-called Saturn Investment Europe bonds collapse by as much as 97pc. The London court case does not involve Dublin-based Bloxham.

The nuns taking the action in London allege that between January 2005 to December 2006, they were convinced to buy €5.87m worth of "so-called Hybrid Structured euro constant maturity swap notes" with steady returns of 6.25pc a year for four years.


They claim Morgan Stanley contractually assured them the bonds would be sold immediately if downgraded to a certain level. Deutsche Bank was the custodian of the deal.

By January 2009, the bonds were downgraded to junk status by Standard & Poor's.

Instead of fulfilling its alleged promise, Morgan Stanley waited five months before selling the bonds, according to the claim.

The bank allegedly made US$11.2m in the delay. By then, the bonds were worth a fraction of what the nuns had paid.

The two groups of nuns, who together invested €500,000, and other investors are looking for the return of €5.87m invested along with some compensation.

Their case is being handled by London-based solicitors Stewarts Law.

Morgan Stanley now has a month to file a response with London's High Court and the case is expected to be heard sometime next year.

The Sisters of Charity of Jesus and Mary list their address as Provincial House in Letchworth in the UK while the Holy Faith Sisters' address is in Aylward House in Glasnevin, Dublin.

Other investors to have lost money include stud owner Geraldine MacCann of Loughbrown Stud who invested €294,000.

Irish Independent

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