A federal judge in Manhattan on Thursday dismissed two lawsuits in which participants in Morgan Stanley's retirement plan accused the firm of mismanaging some plans by allowing participants' money to remain in its stock even as its performance faltered in 2008.
Reuters reports that plan participants contended that Morgan Stanley officials knew the risks of owning its stock were growing, citing $9.4bn of mortgage securities-related writedowns in 2007, and increased market volatility that led to Bear Stearns' demise and the Lehman Brothers bankruptcy the next year.
They said Morgan Stanley should have done a better job of warning about the risks of owning its stock, and should not have been matching their contributions with company stock. Plaintiffs participated in the bank's 401(k) and employee stock ownership plans from late 2006 through September 30, 2008.
In the meantime, the news agecy reports that a U.S. judge said on Thursday he was sympathetic to the U.S. government's use of a 1989 law against Bank of New York Mellon Corp in a lawsuit accusing it of overcharging clients for trading currencies.
The arguments before U.S. District Judge Lewis Kaplan in Manhattan were a test of the U.S. Justice Department's use of a powerful law born out of the savings-and-loan crisis.
The law, known as the Financial Institutional Reform, Recovery and Enforcement Act, is at the heart of a series of civil lawsuits filed in the wake of the recent financial crisis. It is also the core of the lawsuit against BNY Mellon, which had moved to dismiss the case.
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