Morgan Stanley has won its battle against Russian tycoon Oleg Deripaska who claimed the bank had cheated it out of millions after insider trading amid the financial crisis
Morgan Stanley has won its battle against Russian tycoon Oleg Deripaska who claimed the bank had cheated it out of millions after insider trading amid the financial crisis.
Veleron BV, a Dutch company controlled by Deripaska, claimed Morgan Stanley had used inside information on an investment made by Deripaska through Veleron to Magna International, a Canadian automotive supplier to make a profit.
That investment was financed by BNP Paribas who supplied the $1.2b loan. Morgan Stanley acted as BNP's agent to sell off Veleron's Magna stock if the borrower defaulted.
During the financial crisis in 2008 it was thought that Veleron may have to liquidate its position concerning Magna. Off the back of this information, a trader with Morgan Stanley then began to short-sell Magna meaning that Veleron lost millions and the bank made trading profits.
Veleron claims to have lost almost $80m as a result and filed a lawsuit against the bank in 2012.
On 14 November, the New York jury found that while Morgan Stanley had failed to keep inside information private like it should have done, the firm did not intentionally defraud Veleron.
Morgan Stanley argued it had only made standard risk-management steps and had not taken any illegal steps based on inside information.
In a statement the bank said: “We are very gratified that the jury in this case agreed with us that the plaintiff’s claims were without merit. The evidence made it crystal clear that our employees acted in good faith at all times.”
Such a loss contributed to the Russian businessman’s near financial collapse during the recession.
This comes just two months after a former Morgan Stanley broker pleaded guilty for insider trading.
Vladimir Eydelman admitted to using stolen information to buy securities in a scheme that made $5.6m over five years.
Veleron BV, a Dutch company controlled by Deripaska, claimed Morgan Stanley had used inside information on an investment made by Deripaska through Veleron to Magna International, a Canadian automotive supplier to make a profit.
That investment was financed by BNP Paribas who supplied the $1.2b loan. Morgan Stanley acted as BNP's agent to sell off Veleron's Magna stock if the borrower defaulted.
During the financial crisis in 2008 it was thought that Veleron may have to liquidate its position concerning Magna. Off the back of this information, a trader with Morgan Stanley then began to short-sell Magna meaning that Veleron lost millions and the bank made trading profits.
Veleron claims to have lost almost $80m as a result and filed a lawsuit against the bank in 2012.
On 14 November, the New York jury found that while Morgan Stanley had failed to keep inside information private like it should have done, the firm did not intentionally defraud Veleron.
Morgan Stanley argued it had only made standard risk-management steps and had not taken any illegal steps based on inside information.
In a statement the bank said: “We are very gratified that the jury in this case agreed with us that the plaintiff’s claims were without merit. The evidence made it crystal clear that our employees acted in good faith at all times.”
Such a loss contributed to the Russian businessman’s near financial collapse during the recession.
This comes just two months after a former Morgan Stanley broker pleaded guilty for insider trading.
Vladimir Eydelman admitted to using stolen information to buy securities in a scheme that made $5.6m over five years.
