THE HOLY Faith Sisters in Glasnevin in Dublin are among 88 Irish investors suing London-based investment bank Morgan Stanley for up to €6 million related to bonds they purchased through Bloxham Stockbrokers.
Proceedings were launched this week in the High Court in London related to €6 million of bonds they purchased in 2005 and 2006 from Saturns Investments Europe Plc, a special purpose vehicle set up by Morgan Stanley. The euro-denominated notes were secured by US dollar Dresdner Funding Trust bonds.
The 88 investors, who are represented by London firm Stewarts Law LLP, include the Irish Veterinary Benevolent Fund, BMD Insurance and individual investors.
The claimants allege Morgan Stanley failed to redeem the notes when what they see as a “mandatory redemption event”, as defined in their contract, was triggered in January 2009 – the downgrading of the underlying Dresdner Bonds to junk status by ratings agency Standard and Poors.
They claim that the bank waited until June 2009 to redeem the notes, after the price of the underlying bonds had recovered significantly, securing Morgan Stanley a profit of at least $11.2 million (€8.7 million) on the sale of the notes by way of a “termination payment” but leaving them with nothing.
The case relates to the same fund at the centre of a series of cases being taken against Bloxham Stockbrokers in the Irish courts by various parties, including the Solicitor’s Mutual Defence Fund. The SMDF claims they were mis-sold a bond by Bloxham, which was provided by Morgan Stanley, and subsequently collapsed in value.
Bloxham has strenuously rejected the claim, and has claimed any loss was caused, or contributed to, by Morgan Stanley and Saturns. In February Bloxham was permitted by the Commercial Court in Ireland to join Morgan Stanley as a third party to proceedings against the stockbroker.
Bloxham is supporting the current case being brought in the British High Court by Irish investors, who are claiming damages from Morgan Stanley and Saturns to the value of their entire noteholding, €5,878,500, or, alternatively, the profit which Morgan Stanley made as a result of the sale of the notes in June 2009.
Morgan Stanley has 14 days to respond to the claim.
