Irish Nuns Sue Morgan Stanley, Deutsche Bank Over Bad Bond Deal
Has Judgment Day arrived early on Wall Street?
Taking their cue from their American sisters, several groups of Irish nuns are suing Morgan Stanley and Deutsche Bank for misleading them into buying worth of bonds and incurring losses of five million Euros (approximately $6.4 million), Reuters reports (h/t The Telegraph).
A case entitled 'The Sisters of Jesus and Mary vs. Morgan Stanley' was filed at the High Court on Tuesday bearing the names of 88 investors, including the Sisters of Charity of Jesus and Mary, the Holy Faith sisters and the Irish Veterinary Benevolent Fund, according to Financial News.
The nuns allege that between January 2005 to December 2006, they were convinced to buy 5.9 million Euros worth of "so-called Hybrid Structured euro constant maturity swap notes" for promised steady returns of 6.25 percent a year for four years. They claim Morgan Stanley contractually assured them that the bonds would be sold immediately if downgraded to a certain level. Deutsche Bank was named as the custodian of the deal, Reuters reports.
By January 2009, the bonds were downgraded to junk status by Standard & Poor's. Instead of fulfilling its alleged promise, Morgan Stanley waited five months before selling the bonds, the claim says. Reuters reports that the bank made $11.2 million in the delay. But by then, the bonds were worth less than 20 percent of what the plaintiffs had paid.