Morgan Stanley in $150M Settlement on California MBS Sales

Apr 26, 2019

Photo credit: Getty Images/undefined undefined

Morgan Stanley has agreed to pay $150 million in a settlement with the State of California that resolves charges that the financial institution concealed the high risk of mortgage-backed securities (MBS) sold to the California Public Employees’ Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) between 2003 and 2007.

Morgan Stanley was accused of violating California’s False Claims Act, the Corporate Security Law and the False Advertising Law. As part of the settlement, CalPERS will recover $122 million in damages and CalSTRS will recover $8 million, with the remaining $20 million going to the Office of the Attorney General.

“Morgan Stanley lied about the risk of its products and put profits over teachers and public employees who relied on its advice,” said Attorney General Xavier Becerra. “Today’s settlement holds Morgan Stanley accountable for misleading Californians who were unfairly blindsided. Our office has recovered over $1 billion from cheaters on Wall Street since the financial crisis. Our work isn’t over.”

Morgan Stanley did not issue a public comment on the settlement.

About the author

Phil Hall

Link copied

Published

Apr 26, 2019

People On The Move

Ginnie Mae President Alanna McCargo Announces Resignation

McCargo was first woman and first woman of color at the helm of Ginnie Mae.

The U.S. Department of Housing and Urban Development (HUD) today announced that Alanna McCargo, president of the Government National Mortgage Association (Ginnie Mae), will resign, effective May 3, 2024. McCargo has served in the Biden-Harris Administration since January ...

People On The Move

Christensen, Andrus Added At CE Class Leader

Maximum Acceleration hires mortgage exec. as education director, adds banking manager

Brandon Christensen, a longtime mortgage broker and trainer, has been named Director of Education and National Instructor for Maximum Acceleration LLC, a leading NMLS-approved course provider for mortgage pre-license and continuing education. "Having Brandon join our amaz...