Morgan Stanley, the global financial services firm with a major office complex in Purchase, will pay $2.6 billion to the Department of Justice in a settlement of charges related to the 2008 financial crisis.
A Securities and Exchange Commission filing Wednesday revealed that Morgan Stanley had reached an agreement in principle to pay $2.6 billion to resolve claims the Justice Department”™s civil division intended to bring against the firm for its dealings in mortgage-backed securities. The agreement forced Morgan Stanley to significantly revise its earnings for 2014.
In the SEC filing, the company stated it increased legal reserves for settlements related to mortgage-backed securities by $2.8 billion, thus decreasing the company”™s 2014 income by $2.7 billion and cutting earnings per share for 2014 to $1.35. The company reported earnings per share of $2.75 for 2014 last month. The filing noted that the settlement is not finalized.
The settlement agreement comes just two weeks after Connecticut and 17 other states announced a $1.375 billion settlement with ratings agency Standard and Poor”™s to resolve allegations that it published misleading ratings of certain mortgage-backed securities in the years leading up to the financial crisis.
