Morgan Stanley Dragged Into 'Handbag War'

Morgan Stanley finds itself in the dock in France, participating in a unique law case concerning the so-called 'handbag war' between luxury goods firm LVMH and rival Gucci.

Gucci was an acquisition target for LVMH in the late 1990s and for a couple of years the 'handbags war' raged. Morgan Stanley was working with Gucci. In the end, the company was taken over by French concern PPR at what many still regard as an excessive price. Needless to say, Morgan Stanley did OK out of the Gucci deal.

The Wall Street firm is now being sued by LVMH, which claims that Morgan Stanley mounted a 'concerted campaign of aggression' against it and that the US investment bank was in the habit of issuing negative or 'biased' research notes on it. LVMH has apparently produced a list for court, detailing 168 instances when it alleged Morgan Stanley produced 'flagrantly biased' comments on the company between 1999 - 2002.

LVMH claims that the alleged campaign against it put off Gucci shareholders and evenually pushed the business PPR's way, whereby Morgan Stanley presuambly received a higher fee for its services. LVMH seeks $118m in damages. Morgan Stanley says that the whole thing is a nonsense and is countersuing for $11.9m for damages to its reputation.

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