Morgan Stanley said an Italian prosecutor may seek as much as $3.21bn over allegations that derivatives the investment bank sold more than a decade ago were improper and unfairly unwound.
Bloomberg News reports that Italy’s Court of Accounts, the country’s state auditor, sent Morgan Stanley the proposed claim over derivatives created from 1999 through 2005 and terminated by 2012, the bank said Wednesday in a quarterly regulatory filing.
Italy had paid Morgan Stanley $3.4bn to unwind interest-rate swaps and options that had backfired, as it was cheaper than renewing the contracts, Bloomberg reported in 2012.
Mark Lake, a Morgan Stanley spokesman, said the proposed claim is groundless and that the bank will defend itself vigorously.
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