California reached a $150 million settlement with Morgan Stanley this week tied to claims that the bank concealed the high risk of mortgage-backed securities sold to the California Public Employees’ Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) from 2003 to 2007.
According to Attorney General Xavier Bacerra, Morgan Stanley’s actions “resulted in millions in losses” to CalPERS and CalSTRS. “Morgan Stanley lied about the risk of its products and put profits over teachers and public employees who relied on its advice,” Bacerra explained in a statement.
“[Thursday’s] settlement holds Morgan Stanley accountable for misleading Californians who were unfairly blindsided,” he added. “Our office has recovered over $1 billion from cheaters on Wall Street since the financial crisis. Our work isn’t over.”
Of those settlement proceeds, CalPERS will recover $122 million in damages an CalSTRS $8 million. The remaining $20 million will go to the Attorney General’s Office.