A group of former Eastman Kodak employees have lodged a class action lawsuit claiming nearly $500m (£254m) from Morgan Stanley alleging that the US broker gave them bad advice in saying they could retire early.
The plaintiffs claim they would not have stopped work early if their broker had not told them they would have enough money to live comfortably. The suit names four employees, but the claimants' lawyer estimates more than 1,000 people could be covered by the class action.
The lawsuit alleges that the plaintiffs' broker, Michael James Kazacos, told the Kodak workers they could expect to withdraw about 10 per cent of their savings each year for the rest of their lives without depleting their principal sum. The amounts the plaintiffs claim they lost after they left their employers' retirement plans to put their money with Morgan Stanley range from $120,000 to $320,000. The claimants retired close to the top of the dotcom bubble, with three stopping work in 1998 and the fourth doing so in 2000.
Morgan Stanley and Mr Kazacos's lawyer say the losses were caused by stock market falls and that Mr Kazacos explained the risks of investing. They also say the plaintiffs took out the money for living expenses and that the withdrawals should not be classed as losses. "None of those clients was improperly induced to retire by Morgan Stanley, and certain clients accepted retirement packages rather than face the prospect of imminent lay-offs by their employers," added Morgan Stanley.
An arbitration claim making similar allegations on behalf of 16 additional former Kodak employees was also filed with the Financial Industry Regulatory Authority's arbitration forum.
The lawsuit was filed in New York state court. A class action is a lawsuit in which the claims of many people are decided in a single case. If a judge rules that a case brought by the initial plaintiffs is a class action then all those in similar circumstances are bound by the ruling.Reuse content