Morgan Stanley (MS) has agreed to pay $275 million to the Securities and Exchange Commission to resolve the regulator’s investigation into the firm’s sale of subprime mortgage-backed securities seven years ago. The settlement reached is an “agreement in principal” and, according to the firm in its annual filing this week, it does not have to admit wrongdoing. However, the accord still needs SEC approval to become final.
The regulator had been probing the bank’s roles as an underwriter and sponsor of subprime mortgage-backed bonds that sustained losses after it was issued in 2007. Other firms that have reached similar agreements with the SEC include Citigroup Inc. (C), JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS).
Morgan Stanley is still facing litigation from government entities and private parties over derivatives and mortgage bonds that were set up leading up to the mortgage crisis. Last year, it’s litigation expenses reached $1.95 billion, which is a significant increase from $513 million in 2012.
Since October, Morgan Stanley has settled and resolved nine legal matters, including the $1.25 billion it said it would pay last month to resolve the Federal Housing Finance Agency’s securities claims accusing the bank of selling faulty MBSs to Freddie Mac (FMCC) and Fannie Mae (FNMA), as well as deals with Cambridge Investment Management Inc. and MetLife Inc.
Please contact our mortgage-backed securities lawyers at The SSEK Partners Group today. Your initial case consultation with us is free. Our securities law firm represents institutional investors and high net worth individuals.
Morgan Stanley Agrees to Pay $275 Million to End SEC Probe, Bloomberg, February 25, 2014
Morgan Stanley to pay $1.25 billion to resolve mortgage lawsuit, Reuters, February 4, 2014
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Judge Reject’s AIG’s Bid to Delay $8.5B Billion Mortgage Backed-Securities Settlement with Bank of America Corp. “Hostage”, Institutional Investor Securities Blog, February 21, 2014
Morgan Stanley to Pay $1.25B in Mortgage-Backed Securities Lawsuit by FHFA, Institutional Investor Securities Blog, February 4, 2014