A suit brought by BSF and client MBIA alleging fraud by Morgan Stanley and certain Morgan Stanley affiliated entities has reached a favorable settlement. MBIA brought claims of fraudulent inducement and breach of contract in New York State Supreme Court in December 2010, charging Morgan Stanley with misrepresenting a pool of residential mortgages that it structured and sold as mortgage-backed securities.
In May of 2011, Morgan Stanley lost its bid to have the case thrown out, even at a time when similar cases had been dismissed in the early stages of litigation. The settlement was finalized in mid-December.