August 24, 2014

Morgan Stanley to pay $275M in SEC case

July 28, 2014 – The Securities and Exchange Commission announced that Morgan Stanley has agreed to pay $275 million back to harmed investors after three of its entities were charged with misleading investors during the financial crisis.

SEC alleged the entities "misrepresented the current or historical delinquency status of mortgage loans underlying two subprime [residential mortgage-backed securities] securitizations that came against a backdrop of rising borrower delinquencies and unprecedented distress in the subprime market."

Morgan Stanley did not admit or deny the allegations, but agreed to pay more than $160 million in disgorgement, almost $18 million in prejudgment interest, and a more than $96 million penalty. A Fair Fund is being created to return the funds to the affected investors.