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Nuns suing finance firm over loss of €5m savings

A GROUP of Irish nuns is suing one of the world's leading financial firms.

Morgan Stanley is 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.

The Sisters of Charity of Jesus and Mary are among the investors seeking more than €15m in damages.

They allege improper actions by the investment bank that led them to lose at least €5m, about 80pc of their total investment, a filing by Stuarts Law showed.



Downgraded

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 $11.2m 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.



Damages

The Sisters of Charity of Jesus and Mary, the Holy Faith Sisters, the Irish Veterinary Benevolent Fund and other individual investors bought €5.88m ($7.6m) of the notes through the stockbroker Bloxham in 2005 and 2006.

The investors filed the suit on August 10 in London, according to Stewarts Law. They are seeking damages of more than €15m.

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).

mlavery@herald.ie


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