Morgan Stanley faces lawsuit from Singapore investors

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Morgan Stanley1A group of Singapore investors who lost money on a group of synthetic collateralised debt obligations may pursue their suit against New York-based investment company Morgan Stanley as a class, a judge in Manhattan ruled, according to a Bloomberg report.

US District Judge Jesse Furman said on October 17 the investors may represent a class of all persons who bought any of seven series of Pinnacle notes. The investors – including the Singapore Government Staff Credit Cooperative Society Ltd. – sued in 2010, claiming the notes were a “bait and switch” scheme designed to benefit Morgan Stanley at the expense of customers.

They claim Morgan Stanley invested their principal in high-risk collateralised debt obligations, against which Morgan Stanley made short bets. Morgan Stanley didn’t disclose that it was a counter-party to the agreements, meaning that for every dollar the investors lost, the bank gained a dollar, the investors claim.

The bank is facing a separate lawsuit in New York by Singapore’s Hong Leong Finance over claims it deceptively sold the Pinnacle notes. Hong Leong had a distribution agreement with Morgan Stanley to sell about $72.4 million of the notes.

Singapore’s financial regulator in 2009 banned 10 firms from selling structured investments such as Pinnacle Notes after investors claimed they were misled about products tied to Lehman Brothers. The ban was lifted in 2010 after the institutions boosted internal procedures of their advisory services across all investment products.

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Reading Time: 1 minute

A group of Singapore investors who lost money on a group of synthetic collateralised debt obligations may pursue their suit against New York-based investment company Morgan Stanley as a class, a judge in Manhattan ruled, according to a Bloomberg report.

Reading Time: 1 minute

Morgan Stanley1A group of Singapore investors who lost money on a group of synthetic collateralised debt obligations may pursue their suit against New York-based investment company Morgan Stanley as a class, a judge in Manhattan ruled, according to a Bloomberg report.

US District Judge Jesse Furman said on October 17 the investors may represent a class of all persons who bought any of seven series of Pinnacle notes. The investors – including the Singapore Government Staff Credit Cooperative Society Ltd. – sued in 2010, claiming the notes were a “bait and switch” scheme designed to benefit Morgan Stanley at the expense of customers.

They claim Morgan Stanley invested their principal in high-risk collateralised debt obligations, against which Morgan Stanley made short bets. Morgan Stanley didn’t disclose that it was a counter-party to the agreements, meaning that for every dollar the investors lost, the bank gained a dollar, the investors claim.

The bank is facing a separate lawsuit in New York by Singapore’s Hong Leong Finance over claims it deceptively sold the Pinnacle notes. Hong Leong had a distribution agreement with Morgan Stanley to sell about $72.4 million of the notes.

Singapore’s financial regulator in 2009 banned 10 firms from selling structured investments such as Pinnacle Notes after investors claimed they were misled about products tied to Lehman Brothers. The ban was lifted in 2010 after the institutions boosted internal procedures of their advisory services across all investment products.

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