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News Now

Washington
Morgan Stanley to pay $1.25B over 'faulty' mortgage bonds
WASHINGTON (2/10/14)--Wall Street firm Morgan Stanley and the Federal Housing Finance Agency have reached a $1.25 billion settlement to resolve alleged violations of federal and state securities laws.

Under the terms of the settlement, $625 million, each, will be paid to Fannie Mae and Freddie Mac. The settlement follows a suit that alleged Morgan Stanley misled Fannie Mae and Freddie Mac by selling faulty private-label mortgage-backed securities between 2005 and 2007.

The FHFA has filed 17 similar lawsuits. This is the seventh of those suits to be settled.

The National Credit Union Administration in September also sued Morgan Stanley and eight other institutions over the sale of nearly $2.4 billion in mortgage-backed securities to Southwest and Members United corporate credit unions.

The agency has sued a number of Wall Street banks in similar cases. In November, JP Morgan agreed to pay the NCUA $1.4 billion in a settlement over mortgage-backed securities issued, underwrote and sold to now-defunct corporate credit unions in 2006 and 2007. The wholesale lenders collapsed in 2009 due, in part, to the faulty instruments.
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