Massachusetts Attorney General Martha Coakley recently announced a settlement with Morgan Stanley & Company (“Morgan Stanley”) to resolve allegations that Morgan Stanley sold high risk auction rate securities (ARS) to Massachusetts municipalities and presented the securities as safe investments.

Under the settlement, Morgan Stanley will identify and repay the Massachusetts towns and cities that invested in auction rate securities through the investment bank, and has agreed to cooperate with the Attorney General’s ongoing review of Morgan Stanley’s auction rate securities issues. Morgan Stanley also agreed to reimburse $1.5 million in investment monies to the city of New Bedford and the town of Hopkinton.

The Massachusetts Attorney General’s office has recently entered into similar settlements with Merrill Lynch ($13.7 million) and UBS ($37 million).

For a copy of the Attorney General’s press release announcing the settlement, please click here.