Morgan Stanley will pay $275 million to settle the charges that three of its entities misled investors in a pair of residential mortgage-backed securities the firms underwrote, sponsored and issued.
The Securities and Exchange Commission approved the settlement with the filing of an administrative order on Thursday. Morgan Stanley neither admitted nor denied the allegations in the settlement, which does not require court approval.
A spokesman for the firm told the Wall Street Journal it was “pleased to have settled this matter.”
An SEC investigation found that Morgan Stanley understated the number of delinquent loans in two subprime RMBS securitizations, Morgan Stanley ABS Capital I Inc. Trust 2007-NC4 and Morgan Capital I Inc. Trust 2007-HE7. Disclosure of delinquency information is required under federal regulations.
In a regulatory filing in February, Morgan Stanley disclosed that it had reached an agreement in principle with the Securities and Exchange Commission to resolve the investigation.