Central Laborers' Pension Fund, Jacksonville, Ill., dropped Morgan Stanley CEO John Mack from its shareholder lawsuit against the firm's board of directors and former Morgan Stanley officials to focus more closely on allegations against others, said William Lerach, chairman of the law firm Lerach Coughlin Stoia Geller Rudman & Robbins, which is representing the $850 million pension fund, the lead plaintiff. The law firm, which filed the original suit in July, filed an amended complaint Thursday with the U.S. District Court in Manhattan on behalf of the plaintiffs.
The plaintiffs dropped Mr. Mack "at this time without prejudice," meaning he could be added again at a later date, Mr. Lerach said. The suit, which alleges "years of gross mismanagement" and improper compensation packages for former top executives, now focus more closely on former Morgan Stanley CEO Philip Purcell, former co-president Stephen Crawford and former general counsel Donald Kempf as well as the board in place at the time payments were approved, Mr. Lerach said. Kirkland & Ellis, the law firm that previously represented the Morgan Stanley board, was also dropped as a defendant in the amended complaint.
"The plaintiff dropped John Mack from the lawsuit after they understood the fact that he played no role in authorizing the employment agreements that are the subject of the suit and didn't join the board until after the agreements were approved," according to Craig Brown, a Morgan Stanley spokesman, who read the prepared statement.
"There is absolutely no basis for any claim against Kirkland & Ellis, and we are pleased we have been dropped from this lawsuit," John Hickey, a partner with the law firm, said in a statement.
The pension fund is a Morgan Stanley shareholder, but information on how many Morgan Stanley shares the pension fund holds was not immediately available.