Morgan Stanley has been sued by the U.S. federal credit union regulator over the sale of $566m in residential mortgage-backed securities to two credit unions that failed.
Bloomberg reports that the firm and three units made misleading statements about the securities in offering documents, National Credit Union Administration said in the complaint filed August 16th in federal court in Kansas City, Kansas.
The agency announced the lawsuit Friday, saying it waited until all defendants were served.
Originators of the securities 'systematically abandoned the stated underwriting guidelines in the offering documents', the agency said in a statement. 'The securities were significantly riskier than represented'.
NCUA, based in Alexandria, Virginia, previously sued securities firms run by banks including Goldman Sachs, JPMorgan Chase, Royal Bank of Scotland and UBS over the MBS sales.
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