(Recasts, adds response from Morgan Stanley)
NEW YORK, June 12 Morgan Stanley (MS.N) will
pay $4.4 million to settle a class-action lawsuit with
brokerage clients who bought precious metals and paid storage
fees, according to a court filing.
The proposed settlement, which must be approved by the
federal court in Manhattan, includes a cash component of $1.5
million and economic and remedial benefits valued at about $2.9
million, according to a court filing on Monday.
The suit, filed in August 2005, alleged that Morgan Stanley
told clients it was selling them precious metals that they
would own in full and that the company would store.
But Morgan Stanley either made no investment specifically
on behalf of those clients, or it made entirely different
investments of lesser value and security, according to the
"While we deny the allegations, we settled the case to
avoid the cost and distraction of continued litigation," Morgan
Stanley said in a statement.
According to the filing, Morgan Stanley argued there were
no violations of law and no default or failure to perform or
deliver precious metals.
The suit was filed by Selwyn Silberblatt, on behalf of
himself and others who bought precious metals -- gold, silver,
platinum and palladium in bullion bar or coins -- from Morgan
Stanley DW Inc. and its predecessors and paid fees for their
storage, according to the filing. The suit covered investors
who did so between Feb. 19, 1986, and Jan. 10, 2007.
Silberblatt, a resident of Maine when the suit was filed,
bought silver bars from Morgan Stanley during that period.
(Additional reporting by Joe Giannone)