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But the crux of the defense is that LVMH constructed its case by cherry-picking Kent’s comments from only a “handful” of her reports and press articles, mostly from April 2001 and September 2002. Furthermore, Morgan Stanley charged LVMH with quoting Kent out of context.
At the briefing, Morgan Stanley cited nine instances where LVMH misconstrued Kent’s opinions, made “illogical” allegations or actually agreed with the investment bank.
For example, LVMH’s original writ, filed last October, cites an article in an Italian newspaper from April 2001 in which Kent is quoted as saying Fendi lacks strong management and design, while Yves Saint Laurent is on a fast track to profitability. The implication is that Kent trumpets YSL because its part of Gucci Group, while Fendi is belittled because it belongs to LVMH.
On Monday, Morgan Stanley pointed out that LVMH only owned 25.5 percent of Fendi at the time of the article, compared to 84.1 percent today, taking exception to LVMH’s description of Fendi as “an LVMH Group company.” The defense team also pointed out that the two unrelated observations were separated by 10 paragraphs in the original article, not juxtaposed as in the writ.
But in a case where both sides seem prepared to debate every letter, even LVMH’s punctuation is taken to task, with Morgan Stanley pointing out where its opponent underlined or put in boldface certain words in the writ for emphasis.
The most surprising element of Morgan Stanley’s defense is how it uses LVMH’s own words against it.
In the writ, LVMH infers that Kent attempted to persuade investors to buy Gucci stock over LVMH by stating in a report last September that a war in Iraq would lessen the likelihood of its DFS chain reaching breakeven. In its defense, Morgan Stanley cites Arnault as quoted in WWD. In disclosing first-half earnings at an analysts’ conference last September, Arnault said: “If there’s a war, airports and tourism will screech to a halt.”