Regions

Morgan Stanley and others in faulty securities sale lawsuit by US regulator

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September 24
7:55 AM 2013

In a filing done last Monday, National Credit Union Administration (NCUA) accused 9 financial institutions of selling faulty mortgage-backed securities worth around USD2.4 billion mortgage-backed securities to two credit unions. 

NCUA Board Chairman Debbie Matz said, "We continue to pursue accountability and recovery in the wake of billions of dollars in sales of faulty securities that led to the collapse of several corporate credit unions and handed the industry the costly bill of paying for the losses." 

The US regulator mentioned Morgan Stanley and Morgan Stanley Capital I Inc, JPMorgan Chase & Co's unit Bear Stearns, Barclays, Royal Bank of Scotland Group, UBS and Credit Suisse Group in its claim. Former Residential Funding Securities LLC and now Ally Securities, Wells Fargo & Co unit Wachovia Corp and Goldman Sachs Group Inc were also mentioned in the complaint.

Southwest and Members United corporate credit unions paid over USD416 million for Morgan Stanley's faulty securities and paid over USD1.9 billion for securities that were sold by the rest of the defendants.

When Reuters pursued the banks for comment, none of the banks could not be immediately reached. 

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