California AG: Morgan Stanley in $150 Million Settlement Agreement

   By Stephen Nakrosis 
 

The Attorney General of California said Thursday that Morgan Stanley would pay $150 million to settle allegations the company misled investors, including pension funds serving California's teachers and public employees.

"Morgan Stanley lied about the risk of its products and put profits over teachers and public employees who relied on its advice," said Attorney General Xavier Becerra. "Today's settlement holds Morgan Stanley accountable for misleading Californians who were unfairly blindsided."

The settlement agreement says Morgan Stanley denies the allegations and all claims of wrongdoing.

Morgan Stanley was alleged to have misled investors by concealing high risks involved with mortgage-backed securities it sold. Both the California Public Employees' Retirement System and the California State Teachers Retirement System purchased these securities between 2003 and 2007.

The settlement resolves the allegation, the Attorney General said.

CalPERS will recover $122 million in damages and CalSTRS will recover $8 million, with the remaining $20 million going to the Office of the Attorney General to recover costs pertaining to this investigation and lawsuit, and to help with future investigations and prosecutions.

A Morgan Stanley spokesman said this was the company's final regulatory settlement related to the financial crisis.

--Write to Stephen Nakrosis at [e-mail]

(END) Dow Jones Newswires

April 25, 2019 15:31 ET (19:31 GMT)

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