Billionaire financier Ron Perelman won $604.3 million in compensatory damages yesterday in a lawsuit accusing the investment bank Morgan...
WEST PALM BEACH, Fla. — Billionaire financier Ron Perelman won $604.3 million in compensatory damages yesterday in a lawsuit accusing the investment bank Morgan Stanley of duping him about a takeover deal.
The jury found that Perelman, the Revlon cosmetics chief, relied on false statements that Sunbeam was a turnaround success and could afford to acquire his camping-equipment company, Coleman.
Sunbeam filed for bankruptcy protection in 2001 after its financial troubles were discovered, and Perelman alleged he lost millions because the Sunbeam stock he received in the deal plunged in value.
He is also seeking $2 billion in punitive damages, which the jury will consider over the next few days.
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Morgan Stanley said it would appeal and was confident the decision would be overturned.
Before the trial, the judge ruled that jurors must accept as fact that Morgan Stanley helped Sunbeam cover up its failing finances. That meant Perelman had to show only that he relied on the firm’s advice when he accepted 14.1 million shares of Sunbeam stock in the 1998 buyout.
“The verdict, while disappointing, is not surprising, given the unprecedented and highly prejudicial rulings imposed by the trial judge,” Morgan Stanley said. “Morgan Stanley was not permitted to defend itself on the merits. As a result, the jury heard allegations, instead of true facts, and Morgan Stanley was denied a fair trial.”
Perelman’s lawsuit contends that Morgan Stanley stood to earn $40 million from Sunbeam’s acquisition of Coleman.
Morgan Stanley claimed that Perelman benefited from the deal because Sunbeam absorbed $519 million in debt from a Perelman-controlled company. In addition, Perelman pocketed $160 million in cash from Sunbeam along with the stock.