Morgan Stanley will pay $63 million to settle a series of government lawsuits claiming the bank misrepresented securities it sold to banks that later failed.
The Federal Deposit Insurance Corp. sued the New York-based lender after taking over three banks that had failed following the 2008 financial crisis. The FDIC accused Morgan Stanley of violating laws in the sale of 14 residential mortgage-backed securities offerings to the banks in Alabama, Nevada and Colorado, the agency said.
The settlement was announced by the FDIC in a Tuesday news release.
- Virginia
Bank of America and nine other banks have agreed to pay about $63 million to settle claims they misled the state of Virginia into buying faulty residential mortgage-backed securities.
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The settlement -- coordinated with the Department of Justice -- doesn't represent "an admission or evidence of liability," according to the agreement. This latest settlement brings the total collected from Morgan Stanley by the FDIC to $86.95 million for mortgage-backed securities claims. The money will go to cover losses the smaller banks incurred in their failures.
In December, Morgan Stanley agreed to pay $225 million to resolve lawsuits from another regulator, the National Credit Union Administration, which also accused the bank of selling faulty mortgage-backed securities. That agreement was done without the bank admitting wrongdoing.
Mark Lake, a Morgan Stanley spokesman, declined to comment.
