Morgan Stanley shared in the earnings boom for Wall Street Firms as it reported earnings for its latest quarter of $2.56 Billion, a 29% increase over a year ago.
The investment giant is also celebrating a victory in the Florida courts, having convinced an appeals court to throw out an $1.58 Billion jury award against it for its mis-handling of a 1998 merger between Coleman Company with Sunbeam Corporation.
Morgan Stanley had faced an uphill fight in that case because it failed to honor a court order to produce e-mails sought by lawyers for the plaintiffs. Frustrated by the delays, Palm Beach County trial judge Elizabeth Maass issued a ruling that the Morgan Stanley and Sunbeam conspired to defraud the plaintiff and presented the case to the jury to establish the damages. Morgan Stanley had in 2005 set aside $360 million of reserves for the case expecting the jury verdict to be reduced. That will presumably will then be added to the firm’s current earnings.
Meanwhile, Morgan Stanley had been ordered to pay a mere $15 million to resolve a U.S. Securities and Exchange Commission probe into its destruction of e-mails thwarting investigations. Thus, while the judge’s decision to sanction Morgan Stanley for its failure to produce e-mails would have cost that firm approximately a month of pre-tax profits, the SEC’s “wrist slap” merely cost Morgan Stanley about 2 hours of pre-tax profit.