Case Page

 

Case Status:    DISMISSED    
On or around 03/28/2006 (Date of order of final judgment)

Filing Date: May 21, 2004

According to an article dated May 31, 2007, the Sixth U.S. Circuit Court of Appeals affirmed a district court's decision to dismiss a securities fraud class action against a brokerage firm, finding that the investors failed to allege their claims with particularity. Mutual funds investors sued Morgan Stanley, alleging violations of §10(b) and Rule 10b 5 of the Securities Exchange Act of 1934. The investors claimed that brokers at Morgan Stanley advised them to invest in Class B shares instead of Class A shares when they invested $50,000 or more, even though the brokers knew that Class A shares were better for the investors than Class B shares because the fees associated with purchasing Class A shares were less than the fees for Class B shares when more than $50,000 was invested. The investors alleged that the brokers advised them to invest in Class B shares in order to charge higher fees. The district court granted Morgan Stanley's motion to dismiss, and the investors appealed.

On December 17, 2004, the Court entered the Order denying the defendant’s motion to change venue to the Middle District of Tennessee. On March 3, 2005, the Court entered the Order granting the motion to appoint lead plaintiff and lead counsel. On April 25, 2006, the defendant Morgan Stanley DW, Inc. filed a motion to dismiss the complaint. On March 9, 2006, the Court entered the Order granting the motion to dismiss. As a result, the plaintiff filed a Notice of Appeal in the U.S. Court of Appeals.

The original complaint alleges that the defendants engaged in fraudulent and deceptive practices in connection with the sale of Class B shares, resulting in class members paying excessive fees and/or loads with respect to such shares. The suit alleges that Morgan Stanley DW (MSDW) violated Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5 promulgated thereunder.

The plaintiffs are investors who invested, as a result of the recommendation of a MSDW broker, in Class B shares in Morgan Stanley mutual funds from February 24, 1998 forward under the circumstances discussed below.

The lawsuit seeks certification of (a) a class consisting of non-retirement account investors who purchased in a single or combined transaction $50,000 or more of Class B shares in one or more Morgan Stanley mutual funds during the period February 25, 1998 and thereafter; (b) a class consisting of all retirement account investors who (i) purchased in a single or combined transaction $50,000 or more of Class B shares in one or more Morgan Stanley mutual funds during the period February 25, 1998 and thereafter, and (ii) were less than 54 years of age at the time the purchase(s) giving rise to class status were made; and (c) a class consisting of all retirement account investors who (i) purchased in a single or combined transaction $100,000 or more of Class B shares in one or more Morgan Stanley mutual funds during the period February 25, 1998 and thereafter, and (ii) made no withdrawals in the twelve months following the purchase(s) giving rise to class status. Class members must have invested as a result of the recommendation of a MSDW broker.

The suit alleges that for investors in these subclasses, Class A mutual fund shares would have been clearly superior to Class B and that it was therefore unsuitable for MSDW brokers to have recommended Class B shares.

Note: Morgan Stanley DW (MSDWI) is the broker-dealer subsidiary of Morgan Stanley. MSDWI has a sales organization that covers the US, offering an extensive menu of investment services and products. MSDWI serves its parent's investment advisory services, institutional securities, and individual investment businesses.

COMPANY INFORMATION:

Sector: Financial
Industry: Investment Services
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: MWD
Company Market: Open-end Fund
Market Status: Open-end Fund

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: W.D. Tennessee
DOCKET #: 04-CV-2384
JUDGE: Hon. Bernice B. Donald
DATE FILED: 05/21/2004
CLASS PERIOD START: 02/24/1998
CLASS PERIOD END: 05/21/2004
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Boult Cummings Conners & Berry
    PO Box 198062, 414 Union St. - Ste 1600, Boult Cummings Conners & Berry, TN 37219
    615.244.2582 ·
  2. Falls & Veach, P.L.C.
    3422 Woodmont Boulevard, Falls & Veach, P.L.C., TN 37215
    615.242.1800 ·
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