Morgan Stanley

( MWD) will reassess its legal reserves after losing a huge jury verdict to billionaire Ron Perelman in a fraud suit.

A Florida state jury on Monday ordered Morgan Stanley to pay $604 million in damages to Perelman in a dispute stemming from the collapse of

Sunbeam

, the small appliance manufacturer.

The investment bank recently upped the amount of money it set aside to cover the trial to $360 million. In a regulatory filing Tuesday, Morgan Stanley said it would reassess the provision in light of the verdict, which it intends to appeal.

"The verdict, while disappointing, is not surprising, given the unprecedented and highly prejudicial rulings imposed by the trial judge," the company said in a statement Monday. "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."

The jury will now mull possible punitive damages in the case, but legal experts still believe the suit will be resolved in a negotiated settlement. In fact, settlement talks had been ongoing, even as the jury was deliberating. The verdict strengthens Perelman's hand.

Shares of Morgan Stanley were recently down 40 cents, or 0.8%, to $48.40 in premarket trading Tuesay.

Lawyers for Perelman issued a statement saying they "believe that the decision sends a very clear message that those who aid a fraud will be held accountable."

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The verdict is 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.

The jury, sitting in a courtroom in West Palm Beach, Fla., found that Morgan Stanley misled Perelman about Sunbeam's financial health when it advised him to sell his majority stake in Coleman to Sunbeam. When Sunbeam's stock collapsed in a late-1990s accounting scandal, Perelman's 14 million shares of the company's stock became worthless.

Perelman, who is married to the actress Ellen Barkin, is best-known for being chairman of the cosmetics company

Revlon

(REV) - Get Report

. Sunbeam is now part of

Jarden

(JAH)

, a consumer products company.

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.