Hong Leong sues Morgan Stanley over Pinnacle notes

Singapore finance firm alleges instruments were designed to fail in US bank’s favour

NEW YORK – Morgan Stanley was sued by Singapore’s Hong Leong Finance in federal court in Manhattan over claims it deceptively sold investments that were designed to fail.

Hong Leong alleged in a complaint filed today that it entered into a distribution agreement with the New York-based investment bank to sell about US$72.4 million (S$89.8 million) worth of the so-called Pinnacle notes to customers.

The notes later failed and the Singapore-based company was required to compensate customers for at least US$32 million in losses, according to the filing.

Morgan Stanley sold the notes as relatively safe investments while rigging them to fail for its own benefit, Hong Leong claimed.

“Morgan Stanley secretly, deceptively, and wrongfully invested the investors’ principal in very risky underlying assets,” according to the complaint, filed by Mr David S Stellings, a lawyer for Hong Leong.

A spokeswoman for Morgan Stanley declined to comment on the suit. BLOOMBERG

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