Date
24 November 2017
Morgan Stanley, like other major US banks, has had to pay billions to settle accusations it sold faulty mortgage-based securities. Photo: AFP
Morgan Stanley, like other major US banks, has had to pay billions to settle accusations it sold faulty mortgage-based securities. Photo: AFP

Morgan Stanley to pay US$2.6 bln to settle mortgage probes

Morgan Stanley has agreed to pay US$2.6 billion to settle probes into its creation and sale of residential mortgage-backed securities, Bloomberg reported.

It is the latest large Wall Street firm to be held to account for the 2008 financial crisis.

The firm increased legal reserves related to mortgage matters by about US$2.8 billion, cutting 2014 income from continuing operations by US$2.7 billion, it said in an annual regulatory filing Wednesday. 

JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. — the three biggest US banks — have already settled with federal and state authorities over the probes, agreeing to pay a total of more than US$35 billion in cash and consumer relief.

Goldman Sachs Group Inc. disclosed this week that it had received a letter from the US Attorney’s Office in Sacramento saying a civil lawsuit may be brought against the firm.

Morgan Stanley agreed last year to pay US$1.25 billion after the Federal Housing Finance Agency accused it of selling faulty mortgage-backed securities to Fannie Mae and Freddie Mac.

In July, Morgan Stanley reached a US$275 million settlement with the Securities and Exchange Commission over claims it understated the number of delinquent loans backing subprime mortgage securities.

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