According to the Federal Deposit Insurance Corporation, Morgan Stanley has agreed to pay $62.95 million to resolve claims over the sale of toxic mortgage-backed securities to three banks that later failed. The FDIC is acting as the receiver for the failed banks.
The settlement brings the total amount of FDIC settlements with Morgan Stanley over residential mortgage-backed securities to $86.95 million.
The FDIC's short press statement explains: "This settlement resolves federal and state securities law claims based on misrepresentations in the offering documents for 14 RMBS purchased by the three failed banks. As receiver for failed financial institutions, the FDIC may sue professionals and entities whose conduct resulted in losses to those institutions in order to maximize recoveries. The FDIC as receiver for the three failed banks filed four lawsuits from February 2012 to January 2014 against Morgan Stanley and other defendants for violations of federal and state securities laws in connection with the sale of RMBS to the three failed banks."
The settlement does not name any employees or officers. but it also does not waive any claims that the government might have against them. You can view the settlement agreement here:
https://fdic.gov/about/freedom/plsa/rmbs_al_colonialbank_et_al_morganstanley.pdf
Based on what I have read about prior bank settlements, and because the settlement agreement does not specify that Morgan Stanley has agreed not to deduct the payment, I think that the bank will be able to deduct the payment. My research has not confirmed that, however.
Posted by: Allison Zieve | Monday, February 08, 2016 at 11:01 AM
Were any bank employeees or officers named for breaking the laws, for which the bank paid fines? Will the bank be permitted to deduct the fines as business expense?
Posted by: stephen kelleher | Saturday, February 06, 2016 at 07:50 PM