• Home
  • News
  • Fortune 500
  • Tech
  • Finance
  • Leadership
  • Lifestyle
  • Rankings
  • Multimedia
FinanceMorgan Stanley

Morgan Stanley agrees to $275 million mortgage settlement

By
Tom Huddleston Jr.
Tom Huddleston Jr.
By
Tom Huddleston Jr.
Tom Huddleston Jr.
July 24, 2014, 3:58 PM ET
<h1>Morgan Stanley made money on Facebook share drop</h1>


While the majority of coverage of <a href="http://money.cnn.com/quote/quote.html?symb=FB&amp;source=story_quote_link" title="">Facebook's</a> IPO and stock fluctuations has focused on the negative, <em>Fortune</em> highlighted a silver lining for some investment banks: <a href="http://money.cnn.com/quote/quote.html?symb=MS&amp;source=story_quote_link" title="">Morgan Stanley </a>and other underwriters of the IPO made money despite falling shares. The question was, did Morgan Stanley warn some clients but not others about some of Facebook's problems before the IPO?



<a href="http://finance.fortune.cnn.com/2012/05/24/morgan-stanley-facebook-ipo-drop/" title="">Read "Morgan Stanley made money on Facebook share drop."</a>
<h1>Morgan Stanley made money on Facebook share drop</h1> While the majority of coverage of <a href="http://money.cnn.com/quote/quote.html?symb=FB&amp;source=story_quote_link" title="">Facebook's</a> IPO and stock fluctuations has focused on the negative, <em>Fortune</em> highlighted a silver lining for some investment banks: <a href="http://money.cnn.com/quote/quote.html?symb=MS&amp;source=story_quote_link" title="">Morgan Stanley </a>and other underwriters of the IPO made money despite falling shares. The question was, did Morgan Stanley warn some clients but not others about some of Facebook's problems before the IPO? <a href="http://finance.fortune.cnn.com/2012/05/24/morgan-stanley-facebook-ipo-drop/" title="">Read "Morgan Stanley made money on Facebook share drop."</a>Photograph by Emmanuel Dunand/AFP/GettyImages

Morgan Stanley (MS) has reached an agreement to pay $275 million to settle the U.S. government’s fraud allegations related to the bank’s sale of mortgage-backed securities ahead of the financial crisis.

The deal settles charges that Morgan Stanley and two of its subsidiaries misled investors over the delinquency status of mortgage loans packaged with two subprime securities, the U.S. Securities and Exchange Commission said Thursday. As part of the agreement, Morgan Stanley is neither admitting nor denying the SEC’s allegations.

“Morgan Stanley understated the number of delinquent loans behind these securitizations during a critical juncture of the financial crisis and denied investors the full extent of the facts necessary to make informed investment decisions,” Michael Osnato, chief of the SEC Enforcement Division’s complex financial instruments unit, said in a statement.

Fortune’s Stephen Gandel has previously written about the fact that Morgan Stanley had been the one major bank to more or less avoid the onset of fines and settlements faced by its Wall Street rivals in the wake of the financial crisis. Unlike most of its banking brethren, Morgan Stanley did not disclose in regulatory filings last fall how much money it set aside for potential legal costs, while other banks – including Bank of America, Citibank, Goldman Sachs and JP Morgan – said they were stashing billions of dollars apiece for future settlements.

Bank of America is still in talks with the government over exactly how much it will pay to settle its own mortgage-related claims, with its price-tag rumored to be as much as $13 billion. Citigroup agreed to pay $7 billion earlier this month, while JP Morgan previously agreed to pay $13 billion. Goldman reached a then-record $550 million settlement with the SEC in 2010 over its own marketing of mortgage-backed securities.

About the Author
By Tom Huddleston Jr.
See full bioRight Arrow Button Icon
Rankings
  • 100 Best Companies
  • Fortune 500
  • Global 500
  • Fortune 500 Europe
  • Most Powerful Women
  • Future 50
  • World’s Most Admired Companies
  • See All Rankings
Sections
  • Finance
  • Leadership
  • Success
  • Tech
  • Asia
  • Europe
  • Environment
  • Fortune Crypto
  • Health
  • Retail
  • Lifestyle
  • Politics
  • Newsletters
  • Magazine
  • Features
  • Commentary
  • Mpw
  • CEO Initiative
  • Conferences
  • Personal Finance
  • Education
Customer Support
  • Frequently Asked Questions
  • Customer Service Portal
  • Privacy Policy
  • Terms Of Use
  • Single Issues For Purchase
  • International Print
Commercial Services
  • Advertising
  • Fortune Brand Studio
  • Fortune Analytics
  • Fortune Conferences
  • Business Development
About Us
  • About Us
  • Editorial Calendar
  • Press Center
  • Work At Fortune
  • Diversity And Inclusion
  • Terms And Conditions
  • Site Map

© 2025 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.