Morgan Stanley must pay billionaire financier Ron Perelman more than $1.4 billion in damages, awarded by a jury that said it found clear evidence the investment firm acted fraudulently in Perelman’s 1998 sale of his Coleman camping gear company to Sunbeam Corp.
The jury deliberated for nearly four hours Wednesday before deciding on $850 million in punitive damages. On Monday, the same jury awarded Perelman compensatory damages of $604.3 million.
“This should send a clear message to Morgan Stanley about what constitutes professional and ethical behavior,” Perelman’s company, Coleman (Parent) Holdings, said in a statement. Perelman had sought up to $1.8 billion in punitive damages. Florida law limited jurors to that amount, or triple the amount of compensatory damages.
Morgan Stanley plans to appeal and pledged that the verdict would not impede its business. The firm’s attorneys argued they were denied a fair trial because Judge Elizabeth Maass ruled that Morgan Stanley helped Sunbeam, an investment banking client, defraud investors because it failed to turn over evidence in the case.
As a result, Perelman had to prove at trial only that he relied on the fraudulent statements when deciding to sell his controlling stake in the camping equipment company.
In a statement, Morgan Stanley CEO Philip J. Purcell said the 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,” Purcell said. “Morgan Stanley is financially strong and this latest development, while disappointing, will not impede our ability to serve our clients and grow our business.”