If you read the full court file on this, or you understand litigation, you will understand what the verdict means.
The Hand brothers were sued for $2,000,000 based on a $420,000 investment by the plaintiffs. There were many causes of action, including, as it says in the website you reference, securities fraud, negligent misrepresentation, and negligence.
Securities fraud is telling a lie to get money out of people and knowing you are doing it (scienter)
Negligent misrepresentation is when you misrepresent something and you were not careful about what you represented. Does not require scienter
Negligence is not displaying ordinary care.
If you note, there is a judgment for $18,790
Why would someone have a judgment against them for only a fraction of the amount they invested, alleging fraud? its impossible. Fraud is all or nothing.
But, if it were a judgment for negligence, then it makes sense, because there is something called comparative negligence. You might have heard of this in lawsuits about car accidents for example. Both parties were negligent, one 90% and the other 10%. So, the one who was negligent 10% still has to pay!
In this case, 18/420 = 4%. So the jury apparently decided that the Hands were 4% negligent and the plaintiffs were 96% liable for losing their money. How could this be? What usually happens when juries find like this in securities cases, is that they were told in the offering document of certain risks or possible outcomes for the company, and the reason the company failed was told them as a real possibility. But they failed to read the offering documentation. So, it was all their fault or in this case the jury decided that the Hands were 4% liable.
If you were living in Las Vegas at the time, you would have known what happened. (Las Vegas is just a big village)
Hand bought an airline from the guy who founded it, and kept him on as the manager. Hand accused the manager of stealing money from the till, and in response, the manager filed a Chapter 11 on the Company. This caused the FAA to come in, and they discovered that all the airplanes the manager had sold to Hand had bogus parts on them. They had to shut down and they lost all the customers and had no more airplanes.
Now as far as Morgan Stanley, one brother ran the airline, the other was a broker at Morgan Stanley and that is probably why Morgan Stanley got sued. They were seen as the deep pocket, but apparently there was no proof that Morgan Stanley had any involvement or knowledge. So Morgan Stanley would have no liability.
The person who wrote the blog post obviously has no idea of what he is talking about. Its too bad the plaintiffs suffered for years, but it is their lawyers' fault for not understanding.. if you don't read the PPM, you cannot sue for fraud!
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