Retailer LVHM Sues Bank For $99MLNov 26, 2002 | CNN
LVMH, the world's biggest luxury goods retailer, is suing U.S. bank Morgan Stanley for 100 million euros ($99 million) over alleged unfair stock analysis.
"LVMH confirms it has filed a suit against Morgan Stanley,'' a company spokesman said, adding it contained a damages claim for 100 million euros.
The retailer claims Morgan Stanley's research was influenced by its banking relationship with rival fashion house and retailer Gucci Group. Morgan Stanley was an underwriter of Gucci's 1995 initial public offering and has advised the company since.
"LVMH is unhappy with Morgan Stanley's research and alleges unfair treatment," Morgan Stanley, the world's second largest securities firm, said in a statement on Monday.
"Morgan Stanley categorically rejects LVMH's claim and stands by the integrity of its research. Morgan Stanley intends to defend this suit vigorously."
LVMH sold its stake in Gucci to French retailer Pinault Printemps Redoute after it abandoned a long-running ambition to take control of the Italian fashion house. LVMH Chairman Bernard Arnault and PPR's owner Francois Pinault, both self-made billionaires, first locked horns in 1999 after Gucci's head Domenico De Sole called in Pinault to protect it from a takeover from LVMH.
LVMH's move comes as regulators, like the U.S. Securities and Exchange Commission and separate states, probe alleged stock research abuse. A number of firms could be hit with fines of more than $1 billion for their involvement in alleged tainted research, which has been slanted to please corporate executives and win investment-banking business.
Merrill Lynch & Co paid $100 million earlier this year to settle charges of misleading research from New York State Attorney General Eliot Spitzer, who has led the charge for regulators.
Damaging e-mails, including some in which analysts privately disparaged stocks they had publicly recommended, have been uncovered at Citigroup Inc., Merrill Lynch & Co. Inc. and the Credit Suisse First Boston unit of Swiss-owned Credit Suisse Group.