WEST PALM BEACH, Fla. — Jurors witnessed the ire on both sides of the lawsuit brought by billionaire financier Ron Perelman Thursday as the chairman of Revlon Cosmetics evaded questions from Morgan Stanley counsel Mark Hansen.

For a second day, the two faced off in the $2.7 billion suit Perelman filed after selling his company, Coleman, to Sunbeam.

Perelman frequently spoke directly to the jury in evading Hansen's yes-and-no questions about his participation in the Coleman deal. Perelman instead offered extensive explanations that emphasized his reliance on documents given to his team by Morgan Stanley.

Angered by the monologues to the jury, Hansen asked, "Are you finished with your speech, sir?"

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Presiding Judge Elizabeth Maass instructed Perelman to address only Hansen's questions.

Perelman's suit stems from a March 1998 deal in which Perelman sold his 82 percent stake in camping-equipment maker Coleman to Sunbeam for $1.5 billion that included Sunbeam stock worth between $450 million and $680 million. Perelman contends Morgan Stanley, which acted as Sunbeam's investment banker in the deal, intentionally misled him.

Shortly after Coleman was sold, accounting irregularities surfaced at Sunbeam and its stock price plunged.

Perelman alleges Morgan Stanley knew of the accounting irregularities, which included inflating sales figures by booking sales in the wrong quarter, and misrepresented Sunbeam's financial state in numerous financial documents and discussions. Sunbeam filed for bankruptcy protection in 2001.

Morgan Stanley contends Perelman acted on his own in the deal and that the firm is not responsible for his losses.

The lawsuit that normally would have drawn attention from only the financial markets has attracted a wider audience because of Perelman's 2000 marriage to actress Ellen Barkin, 51.

Perelman, 62, is now a frequent subject on the celebrity beat, popping up in such magazines as Vanity Fair and the New Yorker.

Barkin's latest film, "Palindrome," is currently in theaters.

Pivotal press release

For the second day, Hansen cross-examined Perelman on why he didn't take further action to quash the sale of Coleman after he learned of suspect sales reporting.

In one exchange, Perelman waived an annual report in the air and wrongly informed the jury that Morgan Stanley had admitted to criminal behavior in fostering the deal.

Hansen then swiftly moved for a mistrial suggesting the testimony could unfairly bias the jury against the investment banking firm.

Maass refused to grant a mistrial and instead instructed jurors that Morgan Stanley has not "been charged or convicted of a crime in connection with this transaction or acknowledged any wrongdoing."

Maass' instructions Thursday may undermine her earlier ruling on March 24 that the jury should accept as fact, that Morgan Stanley aided in defrauding Sunbeam investors, which included Perelman.

The controversial ruling may play a role in the appeal Morgan Stanley said it is already planning. The judge issued the ruling as a punitive measure against Morgan Stanley for not handing over e-mail evidence.

On the recurring topic of a March 1998 press release, Perelman testified the document — which announced Sunbeam's sales figures for the first quarter of 1998 would not meet analysts expectations — did not worry him. Instead, he viewed the release as a sign Sunbeam was keeping him and the public up-to-date.

"This is good; these guys are keeping us terribly informed about any slippage," Perelman said of the press release. "That is to me the most bullish of all statements."

Morgan Stanley helped draft the release that stated sales would fall below analyst forecasts but would outperform the same period in 1997. When the sales figures were eventually released, they fell far below even the most conservative estimates.

According to Perelman's complaint, Morgan Stanley executives were well aware Sunbeam would not come close to meeting target sales or earnings, yet they chose not to disclose this information because they were just days away from closing the deal that would earn them $32 million. 

Fair warning?

Morgan Stanley is attempting to prove Perelman and his advisors moved ahead with the deal despite obvious warning signs that Sunbeam was in trouble.

Morgan Stanley's defense hinges on the firm's claim that Perelman made an independent decision to take Sunbeam shares in exchange for Coleman, instead of basing his decision on information provided by the investment banking firm.

If Perelman did not rely on Morgan Stanley's role in the deal, the firm would not be responsible for Perelman's eventual losses.

In the same vein, Hansen questioned Perelman about a second press release on April 3, 1998, that delivered more bad news about Sunbeam. According to Morgan Stanley, Perelman did nothing to derail or slow the deal after its publication.

The April 3 document reported sales would be even lower than the warning issued on March 19. Perelman said his team began contacting Sunbeam customers after April 3 but that the information was not consequential enough to kill the deal.

"I felt deceived and lied to," Perelman said of reading the April 3 release. He did not, however, feel the first quarter sales constituted a "material adverse change."

Any material adverse change in Sunbeam's performance would have released Perelman from his obligation to complete the deal.

The case is being tried in the 15th Judicial Circuit Court in Palm Beach County.

The trial is being streamed live on Court TV Extra.