• Home
• /
• Business

ADCB sues Morgan Stanley

ABU DHABI - Abu Dhabi Commercial Bank (ADCB) and GCC institutional investors, which suffered substantial losses in the investments made in Cheyne SIV, will join the class legal action against a U.S investment bank and rating agencies to recover losses.

Morgan Stanley & Co., Bank of New York Mellon Corp. and three securities ratings services have been sued by Abu Dhabi Commercial Bank for allegedly rating too highly a structur ed investment vehicle that collapsed last year. The ADCB seeks unspecified money damages and class-action or group status on behalf of everyone who invested in the vehicle launched by Cheyne Finance Plc from October 2004 to October 2007, according to a complaint filed yesterday in federal court in Manhattan.

"The financial instruments plaintiff purchased which defendants represented had high investment-grade credit ratings are now worth zero,'' lawyers for the bank said in the complaint.

Cheyne's structured investment vehicle, premised on short-term borrowing to buy higher-yielding assets, collapsed last year. Investors have recovered about 55 per cent of the face value of their holdings in an auction of Cheyne's assets. The SIV had owed about $5.7 billion in senior debt, according to its receivers at the accounting firm of Deloitte & Touche LLP.