U.S. investment bank Morgan Stanley <MWD.N> was ordered on Monday to pay $604 million in damages to Ronald Perelman， the billionaire investor who claimed he was defrauded by the Wall Street company over the sale of a business.

Morgan Stanley said it would appeal， arguing it did not get a fair trial under Circuit Court Judge Elizabeth Maass in West Palm Beach， Florida.

Analysts believe the real legal battle will occur in the appeals process.

“Accordingly， we do not expect this ruling to significantly impact Morgan Stanley's share price. The lesson on the peer group should be： when in court， cooperate during the discovery process，” said Sandler O'Neill in a research note.

Morgan Stanley's shares closed 1.2 percent higher at $48.80.

Judge Maass， angry at the securities firm's failure to produce e-mail evidence， had already ruled that Morgan Stanley conspired to defraud， and instructed the jury to decide if Perelman relied on Morgan Stanley when he sold camping goods company Coleman Co. to appliance maker Sunbeam Corp. in 1998.

The jury unanimously agreed that Perelman did. The $680 million in Sunbeam shares that Perelman received as part payment for his 82-percent stake in Coleman soon became worthless when the Sunbeam sought bankruptcy protection in 2001 after a massive accounting scandal came to light.

Perelman， chairman of cosmetics group Revlon Inc. <REV.N>，was seeking $2.7 billion in damages. His lawyers argued that Morgan Stanley had known of the weak finances and fraudulent accounts at Sunbeam， its client， and covered them up so as not to lose around $30 million in advisory fees.

A second phase of the trial， in which the jury decides what punitive damages to award， was expected to begin later this week. Under Florida law， the punitive damages could amount to three times the actual losses of $604 million.

Fox-Pitt， Kelton analyst David Trone expected substantial punitive damages but believed it likely the ruling would be overturned.

“The judge …… became incensed by Morgan Stanley's handling of e-mails during the discovery process， and sanctioned the firm for these failures with a presumption of fraud，” he said.

Trone said it was likely Perelman would agree to a nine-figure settlement rather than risk the case being overturned.

Coleman Co. expressed satisfaction with the verdict in a statement handed out outside the courtroom.

Morgan Stanley， which has boosted reserves for this case by $100 million to $360 million， said it would appeal. The court case has added to other woes at the company， where former top executives are fighting to oust Chief Executive Philip Purcell.

“The verdict， while disappointing， is not surprising given the unprecedented and highly prejudicial rulings imposed by the trial judge，” Morgan Stanley said in a statement.

“Morgan Stanley was not permitted to defend itself on the merits. As a result， the jury heard allegations， instead of true facts， and Morgan Stanley was denied a fair trial.”

Frustrated at Morgan Stanley's inability to produce e-mail documents demanded by Perelman's lawyers —— the firm said backup tapes had been overwritten —— Judge Maass had taken the unusual step of switching the burden of proving its innocence onto Morgan Stanley's shoulders.

The case has already had some fallout at Morgan Stanley.

Early in May， it named mergers and acquisitions lawyer David Heleniak as vice chairman in charge of all legal and regulatory affairs after its longtime chief legal officer，Donald Kempf， came under criticism for his handling of lawsuits and regulatory actions. Kempf， 69， has told management he intends to retire upon the conclusion of the Perelman trial.