A Florida state jury slammed
( MWD) again Wednesday, ordering the big Wall Street firm to pay an additional $850 million in punitive damages to aggrieved billionaire Ron Perelman.
The hefty punitive damages award follows the
jury's earlier verdict awarding $604 million in compensatory damages to Perelman. The dispute stemmed from the collapse of
, the small appliance manufacturer.
Morgan Stanley wasted little time in reiterating its earlier statement that it will appeal the jury's verdict. Moments after news of the punitive damages award was reported, the investment bank issued a press release denouncing the jury awards and a controversial ruling by the trial judge.
"This court has done a great injustice to the employees and shareholders of Morgan Stanley. We will fight to have this decision overturned and we fully expect to prevail," said Morgan Stanley CEO Philip J. Purcell, in a prepared statement.
On Monday, after less than two days of deliberation, the jury found that Morgan Stanley had misled Perelman about Sunbeam's financial health when it advised him to go ahead with the deal. When Sunbeam's stock collapsed in a late-1990s accounting scandal, Perelman's 14 million shares of the company's stock became worthless.
It appeared unlikely Morgan Stanley would prevail in the case after the trial judge issued a critical ruling against the firm. The judge, in an unusual ruling, instructed the jury to assume that Morgan Stanley had defrauded Perelman, after it was discovered the firm had violated a court order to turn over documents that might have been relevant to the case.
The judge's ruling essentially left the jury with little do but decide whether or not Perelman had relied on Morgan Stanley's faulty advice when he sold his majority stake in Coleman to Sunbeam.
Perelman is best-known for being chairman of the cosmetics company
Legal experts say the judge's ruling may have gone too far in punishing Morgan Stanley and the investment bank has a good chance of overturning the verdict on appeal. But most believe the case will end in a negotiated settlement.
In fact, settlement talks had been ongoing, even as the jury was deliberating. The verdict strengthens Perelman's hand.
The twin killer verdicts are another blow to Morgan Stanley, which has seen its image sullied by a highly publicized dispute with a group of former investment bankers over the investment firm's stewardship.