SEC Charges Morgan Stanley with Misleading Investors in Subprime RMBS Offerings
The SEC charged three Morgan Stanley entities with misleading investors in a pair of residential mortgage-backed securities (RMBS) that the firms underwrote, sponsored, and issued. Morgan Stanley agreed to settle the charges by paying $275 million to be returned to harmed investors.
Morgan Stanley & Co. LLC, Morgan Stanley ABS Capital I Inc., and Morgan Stanley Mortgage Capital Holdings LLC,were collateralized by mortgage loans, Morgan Stanley ABS Capital I Inc. Trust 2007-NC4 and Morgan Capital I Inc. Trust 2007-HE7, with an aggregate principal value balance of more than $2.5 billion.
The SEC investigation found that Morgan Stanley misrepresented the current or historical delinquency status of those mortgage loans.
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