Morgan Stanley has paid out a $62.95 million settlement relating to the sale of residential mortgage backed securities to three banks which failed during the credit crisis.
US regulator – the Federal Deposit Insurance Corporation (FDIC) – confirmed on Tuesday that the settlement was to resolve various lawsuits the regulator filed for three failed banks.
It stated these were “based on misrepresentations in the offering documents for 14 residential mortgage-backed securities.”
The settlement follows another lawsuit last year where Morgan Stanley paid $24 million of RMBS claims related to Franklin Bank in Texas.
FDIC announced the settlement of RMBS brings the total RMBS settlements by the FDIC with Morgan Stanley to $86.95 million.
Morgan Stanley’s settlement funds will be distributed among the receivers of Colonial Bank of Montgomery, Security Savings Bank of Henderson and United Western Bank of Denver.
Deutsche Bank settled a lawsuit in 2014 in connection with RMBS, and agreed to pay $810 million after misleading purchasers and tainting sales with conflict of interest.
Similarly, and more recently, Goldman Sachs settled a lawsuit last month for its RMBS practices between 2005 and 2007. Goldman Sachs agreed to pay a massive $5 billion to resolve claims against the bank.
FDIC said: “As of December 31, 2015, the FDIC has filed 19 RMBS lawsuits on behalf of eight failed institutions, including the four lawsuits against Morgan Stanley, seeking damages for violations of federal and state securities laws.”
In its full-year results statement released last month, Morgan Stanley announced revenue of $7.74 billion in Q4 2015, down from $7.76 billion in the previous year. Net income, however, increased from a loss of $1.63 billion in Q4 2014 to $908 million in the final three months of 2015.