Morgan Stanley's chief executive, James Gorman, said there is "no substance" to any allegations that the bank misled investors about mortgage derivatives it sold them.

Gorman, speaking at a press conference in Tokyo on Wednesday, made the comment when asked about a Wall Street Journal report that U.S. federal prosecutors are investigating Morgan Stanley transactions in so-called collateralized debt obligations.

"We have no reason to believe there is any substance behind any supposed investigation that appeared in" the report, Gorman said.

Morgan Stanley arranged and sold CDOs backed by home loans, even as its trading desk would sometimes bet that their value would fall, the report said, citing traders.

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