Mor­gan Stan­ley to pay $63m mort­gage bond set­tle­ment: FDIC

The Pak Banker - - COMPANIES/BOSS -

Mor­gan Stan­ley has agreed to pay nearly $63 mil­lion to re­solve claims over the sale of toxic mort­gage-backed se­cu­ri­ties to three banks that later failed, the Fed­eral De­posit In­sur­ance Corp said to­day. The set­tle­ment re­solves law­suits the U.S. reg­u­la­tor filed as re­ceiver for the three failed banks against Mor­gan Stan­ley and other de­fen­dants over what the FDIC said were mis­rep­re­sen­ta­tions in the of­fer­ing doc­u­ments for the mort­gage-backed se­cu­ri­ties. Mor­gan Stan­ley de­clined com­ment on the set­tle­ment. It was the lat­est step by the Wall Street bank to re­solve U.S. govern­ment claims stem­ming from the sale of mort­gage bonds be­fore fi­nan­cial cri­sis. Mor­gan Stan­ley in Fe­bru­ary 2015 said it had reached an agree­ment in prin­ci­ple to pay $2.6b as part of a set­tle­ment with U.S. Jus­tice Depart­ment over mort­gage bonds. The lat­est set­tle­ment fol­lowed an ear­lier FDIC ac­cord last year in which Mor­gan Stan­ley agreed to pay $24 mil­lion over mort­gage­backed se­cu­ri­ties sold to a fourth failed bank, Franklin Bank of Hous­ton. The Na­tional Credit Union Ad­min­is­tra­tion in De­cem­ber sep­a­rately an­nounced that the Wall Street bank would pay $225 mil­lion to re­solve sim­i­lar claims over se­cu­ri­ties sold to credit unions that later failed. The FDIC said the funds from the lat­est $62.95 mil­lion deal would be dis­trib­uted among the re­ceiver­ships for Colo­nial Bank of Mont­gomery, Alabama; Se­cu­rity Sav­ings Bank of Hen­der­son, Ne­vada; and United Western Bank of Den­ver.

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