Morgan Stanley pays for misleading investors

16 February 2016

Editor

EU regulation

Investment bank Morgan Stanley has agreed a $3.2 billion settlement with the New York Attorney General, Eric Schneiderman over the bank’s deceptive practices, in respect of residential mortgage-backed securities (RMBS ), leading up to the 2008 financial crisis.

The investigation found  that during 2006 the bank deceived investors about the quality of the mortgage loans it securitised and sold to investors, and its process for screening out questionable loans. In fact Morgan Stanley securitised and sold RMBS with underlying mortgage loans that it knew had material defects.

The settlement includes $550 million – $400 million worth of consumer relief and $150 million in cash – that will be allocated to New York State. Morgan Stanley will be required to provide community-level relief to New Yorkers, including loan reductions to help residents avoid foreclosure, and funds to spur the construction of more affordable housing. Additional resources will be dedicated to helping communities transform their code enforcement systems, invest in land banks, and purchase distressed properties to keep them out of the hands of predatory investors.

The settlement was negotiated through the Residential Mortgage-Backed Securities Working Group, a joint state and federal working group formed in 2012 to share resources and continue investigating wrongdoing in the mortgage-backed securities market prior to the financial crisis.

Schneiderman  said the agreement was "another victory in our efforts to help New Yorkers rebuild in the wake of the financial devastation caused by major banks,” and would keep residents in their homes and help to build more affordable housing in New York state.

Latest News

SHareholder meeting

ICCR urges investors to encourage company support against Rule 14a-8 rescission proposal

SHareholder meeting

Fifteen financial institutions push ISSB towards dedicated Nature Standard

SHareholder meeting

NA100 benchmark shows nature commitments progress as investors strengthen engagement efforts

SHareholder meeting

ESMA's Transition and Impact Claims Guidance: Lessons for SFDR II

SHareholder meeting

Tesla’s 2026 AGM sees no shareholder proposals for first time in over a decade

SHareholder meeting

Procter & Gamble shareholder rights proposals draw significant support

Featured Briefings

Minerva Briefing

2026 United States of America Proxy Season Review

Minerva Briefing

US SEC Rule 14a-8 Rescission Proposal

Minerva Briefing

2026 Global Proxy Season Review

Minerva is a global provider of sustainable stewardship solutions with over 30 years of expertise. Minerva empowers investors by providing essential tools, including ESG research and data and expert insights, enabling them to navigate the intricate and ever-evolving landscape of stewardship and proxy voting, whilst ensuring their decisions are well-informed and aligned with sustainable principles.

Related Stories

US State officials raise stewardship concerns over Rule 14a-8 rescission

US State officials raise stewardship concerns over Rule 14a-8 rescission

October 8, 2026
Read More
FRC

FRC’s new regulatory approach signals a shift from rule-making to market stewardship

September 4, 2026
Read More
Australia’s government

Australia narrows climate reporting scope mid‑rollout

May 20, 2026
Read More

Quarterly Reporting: The Next Target in the SEC’s Stewardship Retreat

April 7, 2026
Read More

ISSB Prepares for Final SASB Updates with New Proposals

April 2, 2026

Alex Whitebrook

Read More

From Prudence and Loyalty to Maximum Discretion: How US Fiduciary Duty Just Changed Shape

April 2, 2026

Alex Whitebrook

Read More