According to a press release dated February 27, 2006, the U.S. District Court for the Southern District of New York dismissed Shah's claims as time-barred (SLA 2004-41) and the Second Circuit affirms the ruling.

In a press release dated October 22, 2004, Southern District Judge Richard J. Holwell dismissed the case Shah v. Morgan Stanley, ruling that Morgan Stanley stock investors were on public notice about possible analyst conflicts at the investment bank and had no right to sue over a drop in the stock price. Judge Richard J. Holwell continued to state that numerous publications had detailed alleged conflicts by stock analysts and purchasers of the bank's stock cannot claim damages for a problem of which they should have been aware. The judge agreed with the defendants that Shah's claims were time-barred under the two-year limitations provision of the Sarbanes-Oxley Act. A Notice of Appeal was filed by the plaintiff and is pending in the U.S. Court of Appeals.

A class action lawsuit was filed against Morgan Stanley & Co., Inc., on behalf of shareholder Sandip Shah, under §10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Specifically, the complaint alleges that Morgan Stanley’s analysts suffered under a conflict and were issuing favorable ratings on companies whose investment banking business they hoped to attract or keep. These undisclosed improper business practices artificially inflated the prices of Morgan Stanley stock during the class period. Further, these allegations reveal that Morgan Stanley made a number of false and misleading statements to hide its practices from investors.

The case was transferred from the U.S. District Court of Arizona to U.S. District Court for the Southern District of New York on November 2003.