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Morgan Stanley Will Pay $150M In Toxic Mortgage Bonds Settlement

April 26, 2019

Morgan Stanley has settled a suit which claimed the company hid the high-risk quality of the mortgage-backed securities that were sold to California Public Employees’ Retirement System and the California State Teachers Retirement System from 2003 to 2007, according to HousingWire

 

Inaccuracies were found in the representation of MBS to investors, despite being aware of the misrepresentation. 

 

"Morgan Stanley also allegedly used exaggerated appraisals that overstated the value of the properties securing the loans, and knowingly presented incorrect data concerning owner occupancy and the purpose of the loans," according to the report.

 

The company also allegedly added some of the loans that it previously deemed too risky, back to the mortgage bonds. This allegedly prompted a "Morgan Stanley employee to tell some of his co-workers that someone 'could probably retire by shorting these upcoming deals,' and 'someone needs to benefit from this mess.'"

 

To learn more about this settlement and the details behind the accusations again the company, click own the image above

 

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