On February 11, the U.S. Department of Justice and the Attorney General of State of New York announced dual settlement agreements with Morgan Stanley providing for the payment of $3.2 billion. The settlements relate to Morgan Stanley’s marketing, underwriting, and issuance of RMBS from 2005-2007.
In its agreement with the U.S. Department of Justice, Morgan Stanley acknowledged that it had failed to disclose that certain securitized loans did not comply with applicable underwriting guidelines, and that Morgan Stanley’s due diligence practices did not conform to those described in presentations to RMBS investors. Morgan Stanley will pay $2.6 billion to the U.S. Department of Justice, $150 million to the State of New York, and an additional $400 million in relief directly to consumers. Payment to the U.S. Department of Justice releases Morgan Stanley from any civil claim brought under FIRREA. DOJ Settlement Agreement. State of New York Settlement Agreement.