Hermes Principal Sues J.P. Morgan and Morgan Guaranty

Patrick Guerrand-Hermes, former vice chairman and current director of Hermes International, filed suit yesterday in the Supreme Court of the State of New York against J.P. Morgan & Co. Inc., Morgan Guaranty Trust Co. of New York and J.P. Morgan Securities Ltd. Joining him in that lawsuit is Midori Holdings, Inc., a company created by Guerrand- Hermes to invest $18 million in a Morgan-managed investment portfolio. The complaint alleges that Morgan offered plaintiffs a $24 million loan on the condition that 75 percent of the proceeds would be entrusted to Morgan in an advisor-managed investment account. The complaint describes what happened next:

"After gambling and losing millions of dollars of plaintiff's funds by investing unwisely in high-risk 'emerging market' debt, Morgan blocked plaintiffs' efforts to take control of the investment decision-making and effectively froze their account and all related trading activity. Then, in an incredible display of arrogance, Morgan began demanding additional collateral and threatened to default the underlying loan, notwithstanding its prior representations and promises that is management of plaintiffs' investment portfolio would produce returns more than adequate to cover debt service and the repayment of the loan at maturity."

"Morgan was so anxious to obtain our investment business that it was willing to loan us $19 million more than we had originally requested," said Guerrand-Hermes. "Of course, we did not know that Morgan's management of our investments would cost us millions of dollars. Worse, still, is that we were prevented from exercising any decision-making authority over our own account, while Morgan appeared to be acting in its own self-interest." According to plaintiffs' attorney, William A. Brewer III of Bickel & Brewer, "When a financial institution undertakes to act in potentially- conflicting roles of investment advisor, portfolio manager and lender, the law forbids it from favoring itself to the detriment of its customer." According to the complaint, "Morgan's actions were motivated by a grand design -- namely, to capture a well-known trophy customer (whose name Morgan intended to use in soliciting other private banking business abroad), to perpetuate its control over plaintiffs' investment funds, and to maximize its fees and other charges generated from that relationship." Guerrand-Hermes and Midori seek damages in the amount of at least $20 million. Adds Brewer, "We look forward to laying out the evidence in support of these claims to a New York jury." J.P. Morgan & Co. Inc. is the parent company of the 150-year- old Morgan banking and investment empire. Its largest subsidiary is Morgan Guaranty Trust Co. of New York, its international banking unit. Both companies are headquartered in New York City, and J.P. Morgan Securities Ltd., an affiliated company, is based in London. Patrick Guerrand-Hermes is a French national who resides in Marrakesh, Morocco. He is a member of the prominent European family known worldwide for apparel and accessories of the finest quality. He is currently a share holder and a member of the board of directors of Hermes International, which markets retail products bearing the famous Hermes trade name.

ots Original Text Service: Patrick Guerrand-Hermes Internet: Contact: Scott Jones of The Point Group, (USA) 214-378-7970, ext. 227, or cell, (USA) 817-919-3838, for Patrick Guerrand-Hermes

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Praha, Česká republika (ce)


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