Morgan Stanley to pay $95 million in U.S. mortgage-debt settlement
By Nate Raymond
NEW YORK (Reuters) - Morgan Stanley (MS.N: Quote) has agreed to pay $95 million to resolve a lawsuit accusing the Wall Street bank of misleading investors in mortgage-backed securities in the run up to the 2008 financial crisis.
The settlement, disclosed in court papers filed Monday in New York federal court, follows years of litigation by investors over allegedly false and misleading statements over the soured securities.
The deal stemmed from a lawsuit pursued by the Public Employees' Retirement System of Mississippi (MissPERS) and the West Virginia Investment Management Board.
The plaintiffs accused Morgan Stanley of violating U.S. securities law in packaging and selling mortgage backed securities in 13 offerings in 2006 and 16 offerings in 2007.
In the years since the litigation began in 2008, the plaintiffs were dealt a series of setbacks by U.S. District Judge Laura Taylor Swain who dismissed various claims due to standing and timeliness.
After a ruling in May that dismissed claims brought by some of the plaintiffs, Morgan Stanley said MissPERS had become the lone named plaintiff to have purchased securities in the only remaining offering at issue in the case.
Morgan Stanley said Aug. 5 it had made agreements in principle to settle three class action lawsuits in New York, including the one detailed Monday. In relation to those agreements, it decided to boost its provisions for legal expenses by $53 million.
Morgan Stanley did not admit wrongdoing as part of the settlement. A bank spokesman declined comment, as did David Stickney, a lawyer for the plaintiffs at Bernstein Litowitz Berger & Grossmann. Continued...