The commercial court here said Tuesday that Morgan Stanley has until March 3 to officially respond to a string of charges in the $100 million bias and conflict of interest suit lodged by LVMH Moët Hennessy Louis Vuitton.
But Morgan Stanley wasted no time lashing back, saying Tuesday it plans to launch a counter claim against LVMH for damage done by the proceedings.
In a statement, the investment bank said the original suit, which alleges biased equity research because Morgan Stanley advises LVMH rival Gucci Group, "should never have been brought." It went on to describe the proceedings as "vexatious, without merit and an abuse of the French Court system."
It also reiterated its intention to defend the action vigorously, which commenced Tuesday and could ensue for months, or even years.
A spokeswoman for Morgan Stanley declined further comment. An LVMH spokesman declined comment on the specter of a Morgan Stanley counter suit.
As expected, Tuesday’s hearing was a swift affair, with the judges fixing the date for the next hearing and designating the court’s largest and most prestigious courtroom, with vaulted ceilings displaying elaborate gilt Empire plasterwork.
But even from the first day in court, it was clear the combatants are ready to debate every letter. In a brief exchange before the judges, Morgan Stanley’s counsel argued that the writ labeled the investment bank’s U.S. operations improperly. The LVMH lawyer disagreed, insisting there was no mistake.
Morgan Stanley is represented in Paris by the law firm Gide Loyrette Novel. LVMH is represented by Jeantet Associates.
Documents filed at the court by LVMH cited 41 pieces of evidence, including scores of articles in American, Italian and French newspapers, correspondence between LVMH and Morgan Stanley, numerous Morgan Stanley reports and e-mail records.
The 20-page document portrayed Morgan Stanley, and its chief luxury analyst Claire Kent, as deliberately waging an anti-LVMH, pro-Gucci campaign in the media and in its advice to investors. The wording of the writ, punctuated with exclamation points, is charged and often drips with incredulity.
Referring to some of Kent’s comments in the media that were critical of Fendi, one of LVMH’s fashion and leather goods companies, the suit contended that she "continued her destructive work…, totally strange in her role as a financial analyst, spreading as widely as possible her commentaries and negative opinions about LVMH."