© Reuters. FILE PHOTO: The brand for Morgan Stanley is seen on the buying and selling ground on the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 3, 2021. REUTERS/Andrew Kelly/File Photo
NEW YORK (Reuters) – Morgan Stanley was sued on Monday for at the very least $750 million by non-public fairness companies that claimed they had been defrauded in an funding with a high-speed rail firm.
In a grievance filed in a New York state court docket in Manhattan, associates of Certares Management and Knighthead Capital Management accused Morgan Stanley of breach of contract and fraud for unlawfully restructuring a transaction wherein that they had invested in a mortgage to Brightline Holdings.
Brightline, backed by non-public fairness agency Fortress Investment Group and in addition a defendant, operates a rail system in Florida and is growing a rail line between Los Angeles and Las Vegas.
The plaintiffs mentioned Morgan Stanley satisfied them to make investments about $281 million, however hid particulars of a Brightline most popular share transaction that ought to have required the mortgage be pay as you go at a “make-whole” quantity they estimated at $750 million.
Morgan Stanley was additionally accused of getting swapped out one doc with the signature of a Certares affiliate, to make it seem to be the affiliate had learn and agreed to the popular share transaction.
The plaintiffs mentioned Morgan Stanley’s actions had been supposed to place it for “lucrative investment-banking business” from Brightline and Fortress, together with municipal bond transactions that would generate “sizeable” charges.
In an announcement, Morgan Stanley mentioned “the firm does not believe the claims have merit and will defend itself vigorously.”
Brightline didn’t instantly reply to a request for remark.
The case is CK Opportunities Fund I LP et al v Morgan Stanley Senior Funding Inc et al, New York State Supreme Court, New York County.