theMReport.com Your trusted source for mortgage banking news
Morgan Stanley has agreed to pay $95 million to settle a lawsuit alleging that the New York City-based financial services giant misled investors in mortgage-backed securities purchases prior to the financial crisis of 2008, according to New York federal court papers.
The settlement, which must be approved by U.S. District Judge Katherine Forrest, puts an end to years of litigation brought forth by the Public Employees' Retirement System of Mississippi (MissPERS) and the West Virginia Investment Management Board. The suit was originally filed in 2008, and the settlement was disclosed in court papers filed in New York federal court on Monday.
The plaintiffs alleged that Morgan Stanley violated U.S. securities law in a total of 29 mortgage-backed securities it packaged and sold in 2006 and 2007. The court has dismissed various claims in the years since the suit was filed until MissPERS was the only named plaintiff in the lone remaining issue of the case.
The two parties reached a settlement in July, but did not disclose financial terms until this week.
The court papers indicated that investors expected to receive an average of $2.63 per $1,000 of the original face value that was offered, according to the plaintiffs' lawyers. The lawyers said they are also seeking to be awarded 17 percent of the settlement ($16.2 million) to cover their fees and up to $2 million to cover expenses.
Representatives from Morgan Stanley declined to comment.
