Morgan Stanley settles mortgage probe
February 26, 2015Morgan Stanley said Wednesday it had reached a "preliminary agreement" with US regulators to pay $2.6 billion (2.28 billion euros) in fines for its role in pushing the US financial system to the brink of collapse in 2008 and triggering a global recession.
It was the latest settlement between a major bank and the US Justice Department, which has launched investigations into a number of American financial institutions over the sale of mortgage-backed securities.
The settlement resolves claims the civil division of the Justice Department "indicated it intended to bring against the company," Morgan Stanley said in a securities filing.
Shady dealings with gullible customers
Specifically, the probe focused on the company's due diligence on loans it purchased for securitization, its communications with ratings agencies as well as its disclosures to investors.
It also looked into the bank's handling of servicing and issues related to foreclosure, according to a November 2014 filing by Morgan Stanley.
While sizeable, the amount Morgan Stanley agreed to pay pales in comparison to the fine levied against Bank of America, which also profited from shady dealings with gullible customers.
That fine totaled $16.6 billion and marked the largest settlement in history between the US government and a company.
Regulators have also accepted payments by JPMorgan Chase and Citigroup in similar cases. In all, they have collected more than $35 billion in penalties.
uhe/cjc (dpa, AFP, AP, Reuters)