Hermes Principal Sues J.P. Morgan and Morgan Guaranty

Trust Over Loan-For-Investment Transaction New York (PROTEXT) - Patrick Guerrand-Hermes, former vicechairman and current director of Hermes International, filed suityesterday in the Supreme Court of the State of New York againstJ.P. Morgan & Co. Inc., Morgan Guaranty Trust Co. of New York andJ.P. Morgan Securities Ltd. Joining him in that lawsuit is MidoriHoldings, 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 $24million loan on the condition that 75 percent of the proceedswould be entrusted to Morgan in an advisor-managed investmentaccount. The complaint describes what happened next:

"After gambling and losing millions of dollars of plaintiff'sfunds by investing unwisely in high-risk 'emerging market' debt,Morgan blocked plaintiffs' efforts to take control of theinvestment decision-making and effectively froze their accountand all related trading activity. Then, in an incredible displayof arrogance, Morgan began demanding additional collateral andthreatened to default the underlying loan, notwithstandingits prior representations and promises that is management ofplaintiffs' investment portfolio would produce returns more thanadequate to cover debt service and the repayment of the loan atmaturity."

"Morgan was so anxious to obtain our investment business thatit was willing to loan us $19 million more than we had originallyrequested," said Guerrand-Hermes. "Of course, we did not knowthat Morgan's management of our investments would cost usmillions of dollars. Worse, still, is that we were prevented fromexercising 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 ofBickel & Brewer, "When a financial institution undertakes to actin potentially- conflicting roles of investment advisor,portfolio manager and lender, the law forbids it from favoringitself to the detriment of its customer." According to thecomplaint, "Morgan's actions were motivated by a granddesign -- namely, to capture a well-known trophy customer (whosename Morgan intended to use in soliciting other private bankingbusiness abroad), to perpetuate its control over plaintiffs'investment funds, and to maximize its fees and other chargesgenerated from that relationship." Guerrand-Hermes and Midori seek damages in the amount of atleast $20 million. Adds Brewer, "We look forward to laying outthe 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 subsidiaryis Morgan Guaranty Trust Co. of New York, its internationalbanking unit. Both companies are headquartered in New York City,and J.P. Morgan Securities Ltd., an affiliated company, is basedin London. Patrick Guerrand-Hermes is a French national who resides inMarrakesh, Morocco. He is a member of the prominent Europeanfamily known worldwide for apparel and accessories of the finestquality. He is currently a share holder and a member of the boardof directors of Hermes International, which markets retailproducts bearing the famous Hermes trade name.

ots Original Text Service: Patrick Guerrand-HermesInternet: http://www.newsaktuell.deContact: 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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