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Home > Cases > Morgan Stanley - Structured Notes > Morgan Stanley Overview

Investors Stand To Lose Everything In Pinnacle Notes Series 9 and 10

First it was Lehman Brothers' so-called Principal Protected Notes, now investors in two structured investment products arranged by New York-based Morgan Stanley are set to lose some $26 million following a ratings downgrade on the underlying assets in the Pinnacle Notes Series 9 and 10.

The two products now face a mandatory redemption event. This means the assets of the notes will be sold, with investors receiving a ‘pro-rata share’ of any proceeds.

According to information posted on Morgan Stanley's Web site, however, it's unlikely those proceeds will materialize. Specifically, the company says: “Given the current market values of the underlying assets and the credit default swap transaction, we anticipate that investors will lose all of their original principal investment.”

The real problem for the Pinnacle Notes Series 9 and 10 is what they were linked to: synthetic collateralized debt obligations (CDOs), which Standard & Poor's ultimately slashed to junk status.

The demise of the notes also is attributed to several of the financially distressed companies that the products had ties to, including mortgage giants Fannie Mae and Freddie Mac and Lehman Brothers Holdings.

Pinnacle Notes 9 and 10 were issued by Pinnacle Performance, and distributed in Singapore by DMG and partners, Kim Eng Securities, OCBC Securities, UOB Kay Hian and Hong Leong Finance.

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

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