Tycoon Deripaska’s firm study decision in Morgan Stanley case

MOSCOW, Jun 7 (PRIME) -- Dutch company Veleron Holding belonging to Russian tycoon Oleg Deripaska are studying a decision of a court of appeals that supported Morgan Stanley in a suit, and has no new comment on the case, a representative of the company told PRIME late on Tuesday.

In 2007, Veleron borrowed U.S. $1 billion from BNP Paribas to buy 20% in car component part producer Magna for $1.54 billion. But prices for Magna’s shares dropped due to a financial crisis triggering a margin call, and the companies had to restructure the debt. Magna’s shares were transferred to BNP Paribas, which sold it via Morgan Stanley.

Deripaska sued Morgan Stanley saying that its actions resulted in a fall of Magna shares incurring a financial damage of $25 million. The claimant said that Morgan Stanley started selling the shares after it received insider information about the margin call.

But Morgan Stanley said that the fall of shares was unconnected with any violations of trading rules and that short positions in the shares that the bank owned were standard risk-management actions. In November 2015, the court said that the bank’s actions were legal, while Veleron said it may appeal against the decision.

“As Veleron previously proved during hearings, and jury agreed with it, Morgan Stanley actually traded Magna shares on the basis of insider information that it received but had no right to use in trading operations,” a Veleron Holding representative told PRIME.

“Unfortunately, the jury took the side of Morgan Stanley on the issue of Morgan Stanley intending to violate U.S. legislation on insider trading, and this was confirmed today in the appeal instance. Veleron representatives are now carefully studying the decision of the court of appeals, and we have no new comment on the case.”

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