The state of California is suing investment bank Morgan Stanley over losses during the financial crisis.
California alleges that the firm misrepresented complex investments such as mortgage-backed securities to California pension funds CalPERSand CalSTRS, according to a filing made in state superior court.
“Attorney General Kamala D. Harris today filed a lawsuit against investment bank Morgan Stanley for misrepresentations about complex investments such as residential mortgage-backed securities, in which large pools of home loans were packaged together and sold to investors,” Harris said in a release.
“These misrepresentations contributed to the global financial crisis and to major losses by investors including California’s public pension funds, which are responsible for the retirement security of California peace officers, firefighters, teachers, and other public employees.”
In a response to Bloomberg, Morgan Stanley said they believe the case is unwarranted.
“We do not believe this case has merit and intend to defend it vigorously,” Morgan Stanley said in a statement. “The securities at issue were marketed and sold to sophisticated institutional investors and their performance has been consistent with the sector as a whole. It is also worth noting that the alleged victim in this case elected not to pursue its own lawsuit against the firm.”
We’ve reached out to Morgan Stanley for comment and will update the post if we hear back.
More to come…