Morgan Stanley has agreed to pay $275 million to settle Securities and Exchange Commission charges related to the bank’s role in the sale of securities backed by subprime mortgages, The New York Times reports.
The settlement, approved by the SEC on Thursday, does not require court approval. The SEC alleged that Morgan Stanley had misled investors about two residential mortgage-backed securities (RMBS) that it issued before the 2008 financial crisis. An SEC investigation found that the bank had not properly disclosed to investors that many of the mortgage loans underlying the subprime RMBS securitizations were delinquent, Reuters reports. Federal regulations under the securities laws mandate disclosure of delinquency information for mortgage loans that are serving as collateral.
