Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Morgan Stanley Faces Class-Action Bid in Pinnacle Suit

March 23 (Bloomberg) -- A group of Singapore investors seek a U.S. judge’s permission to sue Morgan Stanley on behalf of all entities that lost money in synthetic collateralized debt obligations allegedly rigged to fare poorly.

Singapore Government Staff Credit Cooperative Society Ltd. and several individuals filed papers yesterday in Manhattan federal court seeking establish a class of all investors in the CDOs issued from Aug. 1, 2006, to the end of 2007.

Investors in Morgan Stanley’s Pinnacle Notes lost $154.7 million reinvested by the bank into CDOs tied to companies such as Fannie Mae, Freddie Mac, Lehman Brothers Holdings Inc. and Washington Mutual Inc., plaintiffs alleged in their lawsuit. Morgan Stanley meanwhile set up a swap that allowed it to profit when the CDOs failed, according to the suit.

“The crux of the action is that defendants engaged in a uniform scheme to defraud the Pinnacle Notes investors,” the Singapore plaintiffs said in a court filing yesterday. “When the underlying assets suffered losses, as intended, the investors’ funds were ’swapped’ to defendants.”

The Singapore investors filed their suit in October 2010 accusing the bank of fraud, negligent misrepresentation and other claims. Morgan Stanley is the largest U.S. wealth management firm by market capitalization.

The case is Dandong v. Pinnacle Performance Ltd., 10-cv-08086, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Christie Smythe in Brooklyn, New York, at csmythe1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.