Handbags at dawn as luxury goods brands fight it out in court

Click to follow

Two of the world's top fashion houses will confront each other in a Paris court today over allegations of biased research from an analyst at a leading US investment bank.

LVMH, the owner of brands such as Louis Vuitton and Christian Dior, has accused rival Gucci's financial adviser Morgan Stanley of targeting it in a "mission of destruction" by producing research that was prejudiced against it. LVMH is claiming €100m (£69.6m) in damages from the US bank, which in turn is counter-suing for €10m.

Both sides will air their grievances in front of a French judge during a one-day hearing at the Paris Commercial Court this afternoon. A judgment is not expected until February.

At the centre of the court action is Morgan Stanley's luxury goods analyst, Claire Kent, widely regarded as the doyenne of the sector. The French group has claimed Ms Kent's mission is to "attack LVMH or its subsidiaries to enhance Gucci, Morgan Stanley's client".

The court will be asked to examine an LVMH writ that includes 41 pieces of alleged evidence of bias, including a CD-Rom with 1,900 pages of research dating back four years.

The US investment bank, which defended Gucci from LVMH's hostile bid in 1999, has called the lawsuit "unjust and abusive", claiming the writ takes Ms Kent's comments "out of context and edits, truncates and manipulates them".

The court case is another high-profile example of the backlash against analysts, which has already claimed the scalp of several key players on Wall Street.

Jack Grubman left Citigroup's Salomon Smith Barney under a cloud last year after misleading his clients with pumped-up reports on the telecommunications industry.

The case this afternoon will test the strength of the Chinese walls between a bank's research and investment banking arms, which apparently counted for little in New York during the dot.com boom. Wall Street was forced to accept a $1.4bn (£880m) settlement after an investigation headed by Eliot Spitzer, the New York Attorney General, found that banks' research departments were regularly biased in their assessment of stocks, with the aim of winning new investment banking for their firms.