The Real Deal New York

Morgan Stanley to pay $275M to settle subprime charges

SEC found that the firm misled investors about mortgage-backed bonds

July 24, 2014 06:10PM

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Morgan Stanley Headquarters in Times Square

Morgan Stanley Headquarters

Morgan Stanley will pay $275 million to resolve the Security and Exchange Commission’s claim that the firm misled its investors in the sale of more than $2.5 billion in bonds backed by home loans.

The settlement comes after the U.S. regulator found that the firm misrepresented the delinquency status of subprime loans that backed the securities.

Michael Osnato, head of the SEC enforcement division’s structured products group, told Crain’s that the delinquency status is “vital information to investors because those loans are the primary source of funds by which they potentially can recover and profit from their investments.”

Earlier this year, Morgan Stanley agreed to pay $1.25 billion to settle separate claims that it sold faulty securities to Fannie Mae and Freddie Mac. [Crain's] – Claire Moses

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