French court finds Morgan Stanley guilty

Jan. 12, 2004 at 8:35 PM
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PARIS, Jan. 12 (UPI) -- A French court in Paris has found Morgan Stanley guilty of publishing research that was biased against LVMH Moet Hennessy Louis Vuitton SA.

The court ordered the U.S. investment bank to pay the luxury-goods group $38.5 million in damages.

Up to now, the European regulators have seemed content to let the United States police its investment banks, but the French court judgment could put pressure on European regulators to act, the Wall Street Journal reported Monday.

In its complaint, LVMH accused Morgan Stanley's luxury-goods analyst, Claire Kent, of casting LVMH in a bad light allegedly to curry favor with an investment-banking client, LVMH archrival Gucci Group NV.

Morgan Stanley said it would appeal the ruling, the Journal said.

"It's dangerous for the entire financial community if you no longer allow analysts a certain freedom of tone and expression," said Hervé Pisani, a partner with the Paris law firm Darrois Villey Maillot Brochier, which represents big European firms but isn't involved in the LVMH case.

"It would be perverse if this decision were to muzzle analysts."

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