The Canadian Press - ONLINE EDITION

Morgan Stanley paying $275M to settle SEC charges over sales of risky mortgage bonds

  • Print

WASHINGTON - Morgan Stanley has agreed to pay $275 million to settle U.S. civil charges that it misled investors about risky mortgage bonds it sold ahead of the 2008 financial crisis.

The Securities and Exchange Commission announced the settlement Thursday with the Wall Street bank. The SEC said Morgan Stanley failed to accurately disclose the delinquency status of home mortgages backing two securities deals that it financed and sold in 2007.

The mortgages underlying the securities had a total value of about $2.5 billion, according to the SEC.

New York-based Morgan Stanley neither admitted nor denied the allegations. "We're pleased to have settled this matter," said spokesman Mark Lake.

The $275 million Morgan Stanley is paying includes a $96.4 million penalty and $160.6 million in restitution of profits from sales of the bonds, plus about $18 million in interest. It will be returned to investors in the deals who were harmed, the SEC said.

Morgan Stanley reported in February that it had reached a preliminary agreement with the SEC to pay $275 million to settle the case. The bank said the payment would be charged against its 2013 results and wouldn't affect its earnings this year.

When the housing bubble burst in 2007, millions of home borrowers defaulted on their loans and bundles of mortgages sold by big banks left investors with billions in losses.

The SEC settlement was the latest in a series of federal actions against big Wall Street banks as the government continues to resolve claims over their conduct six years after the crisis.

Goldman Sachs, JPMorgan Chase, Citigroup and other big banks have been accused of abuses in sales of securities linked to mortgages in the years leading up to the crisis. Together, they have paid hundreds of millions in penalties to settle civil charges brought by the SEC, which accused them of deceiving investors about the quality of the bonds they sold.

In November, JPMorgan, the biggest U.S. bank, agreed to pay $13 billion in a civil settlement with the Justice Department and state regulators over its sales of risky mortgage securities. It was the largest settlement ever between the Justice Department and a corporation.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Lindor Reynolds speaks candidly about life with terminal cancer

View more like this

Photo Store Gallery

  • A mother goose has chosen a rather busy spot to nest her eggs- in the parking lot of St Vital Centre on a boulevard. Countless cars buzz by and people have begun to bring it food.-Goose Challenge Day 06 - May 08, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • Perfect Day- Paul Buteux walks  his dog Cassie Tuesday on the Sagimay Trail in Assiniboine Forest enjoying a almost perfect  fall day in Winnipeg- Standup photo – September 27, 2011   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

Are you still on the Bombers' and Jets' bandwagons?

View Results

View Related Story

Ads by Google