Wall Street firm Morgan Stanley told its investors that it may have to store some money to cover the losses from its court struggle with financier Ronald Perelman in the wake of a judge’s unfavourable ruling.

In a regulatory filing issued on March 23, Morgan Stanley said it might need to "increase the reserve" for this litigation. The firm accepted a $260 million charge for the matter in its fiscal quarter ended Feb. 28, and said it will take a decision whether it is necessary to raise the amount in the next weeks.

Florida state Judge Elizabeth Maass, angered by the failure of the Wall Street firm and its law firm, Kirkland & Ellis, to provide documents in the case, issued a ruling on Wednesday that she will instruct the jury that Morgan Stanley is involved in the fraud against Mr. Perelman.

All Mr. Perelman will have to prove, she stated, is that he trusted the information produced by Morgan Stanley when he sold his 82% stake in camping-gear maker Coleman Co. to Morgan Stanley client Sunbeam in 1998 for $1.5 billion, and that he suffered losses when his holding subsequently declined in the wake of an accounting fraud, according to the Wall Street Journal. Mr. Perelman is filing a lawsuit against Morgan Stanley for $680 million in claimed losses on the deal and about $2 billion in punitive damages.

Morgan Stanley refused to comment on the filing, but had previously denied any wrongdoing, and that it was also hurt by Sunbeam’s fraud, losing $300 million on a loan to Sunbeam it acquired to purchase Mr. Perelman’s stake in Coleman.