If you are a Morgan Stanley private credit investor, you may be entitled to damages for your losses. Morgan Stanley gambled with private credit and that was inappropriate for many investors.
Morgan Stanley gated investors from obtaining redemptions. These funds saw a flood of investors seeking to liquidate their positions in early 2026. The funds fulfilled less than half of the requests.
The issue is that many of the investors should have never been invested in private credit. Morgan Stanley is one of the largest proponents of these investments. Many regulators limited these funds to only professional investors. That is because the funds were known to carry high liquidity and other risk.
High commissions paid by the funds to advisors creates potential fraud. History tells us that this is often the motivator to sell such high-risk funds to income investors with moderate appetites for risk. As reported in the Wall Street Journal, private credit business development companies “typically charge a management fee of 1.25% a year of the value of your investment. You will also pay a performance fee of 12.5% on net investment income.” Compare this to a normal commission for a blue-chip stock that is usually less than .5%.
The recommendation of these investments is not justified by an investor’s high net worth. “A customer’s net worth alone is not necessarily determinative of whether a particular product is suitable for that investor. “
Jeffrey Pederson represents investors and has handled suitability cases for over 20 years. Call for a free and confidential initial consultation.
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