-US regulator sues Morgan Stanley over mortgage securities.
Global Banking News-September 2, 2013--US regulator sues Morgan Stanley over mortgage securities(C)2013 ENPublishing - http://www.enpublishing.co.uk
Global Banking News - 02 September 2013
A US credit-union regulator has sued Morgan Stanley (NYSE: MS), claiming that the investment bank sold defective mortgage securities that contributed to the failure of two institutional credit unions.
The National Credit Union Administration said that the suit is related to USD566m in mortgage securities sold to two wholesale credit unions that eventually had to be closed and taken over by the government. Debbie Matz NCUA board chairman, said, 'Firms like Morgan Stanley sold securities that turned out to be faulty, triggering a crisis in the credit union industry that has been extremely expensive to contain and repair, and credit unions are still paying the tab.'
The lawsuit, filed on August 16, in federal court in Kansas, is the 11th case filed by the regulator over such securities. The lawsuit alleges that documents tied to the securities misstated or omitted facts about how the loans contained in the securities were underwritten, resulting in securities that were far riskier than initially represented.
The regulator has filed actions against numerous banks, including Goldman Sachs Group Inc (NYSE: GS), JP Morgan Chase & Co (NYSE: JPM) and Credit Suisse Group AG (NYSE: CS) (ZHR: CSGN) (CSGN.VX). It has reached USD335m in settlements with Citigroup Inc (NYSE: C), Deutsche Bank AG (NYSE: DB) (DBK.DE), HSBC Holdings Plc (LSE: HSBA) (NYSE: HBC) (HKG: 0005) and Bank of America Corporation (NYSE: BAC).
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