{"id":5927,"date":"2016-02-03T00:00:00","date_gmt":"2016-02-03T06:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2016\/02\/rmbs_cases_and_institutional_f"},"modified":"2022-05-18T14:36:34","modified_gmt":"2022-05-18T19:36:34","slug":"rmbs-cases-and-institutional-f","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/rmbs-cases-and-institutional-f\/","title":{"rendered":"RMBS Cases and Institutional Fraud: Morgan Stanley to Pay $62.9M, Hedge Funds File Lawsuit Against TWC Asset Management, and Deutsche Bank Must Contend With Allegations Claiming Investor Losses of $3.1B"},"content":{"rendered":"<p><strong>Morgan Stanley Settles RMBS Case with FDIC<\/strong><br \/>\nMorgan Stanley (MS) will pay $62.9M to resolve allegations that it misrepresented residential mortgage-backed securities prior to the 2008 financial crisis. The deal was reached with the Federal Deposit Insurance Corp., which sued the investment bank on behalf of Colonial Bank in Alabama, Security Savings Bank in Nevada, and United Western Bank in Colorado. All three banks failed after or during the crisis. By settling, Morgan Stanley is not denying or admitting liability.<\/p>\n<p>According to the FDIC, in offering documents Morgan Stanley misrepresented claims for 14 RMBS mortgage backed securities. This is not the first time the investment bank has reached a deal over RMBS with the FDIC. In 2015, the firm resolved similar claims brought on behalf of Franklin Bank in Texas for $24M.<\/p>\n<p>Also last year, Morgan Stanley arrived at a deal for $2.6B to resolve a U.S. Department of Justice probe into mortgage bonds. The government accused the investment bank of misrepresenting the quality of home loans packed into bonds.<\/p>\n<p><strong>Assett Management Firm Must Face RMBS Lawsuit Brought by Hedge Funds<\/strong><br \/>\nA New York Court refused to grant TCW Asset Management Company\u2019s motion to dismiss RMBS fraud claims brought Basis Yield Alpha Fund and Basis Pac-Rim Opportunity Fund. The Cayman Island hedge funds claim that TWC Asset Management marketed a system for dealing with the RMBS market that it claimed could determine which were the good investments. The purported strategy involved the collateralized debt obligation Dutch Hill Funding II, Ltd., which took a net long position on high-risk RMBS.<\/p>\n<p>The two hedge funds invested over $28.1M in Dutch Hill in May 2007. By July, their investment had become worthless. They sued TCW Asset Management Company in 2012, accusing the firm of fraudulent misrepresentations and a failure to choose Dutch Hill\u2019s RMBS collateral in the ways that it promised. The Basis Funds contended that the defendant knew that the investment strategy couldn\u2019t get the job done.<\/p>\n<p> <a href=\"https:\/\/www.investorlawyers.com\/blog\/rmbs-cases-and-institutional-f\/#more-5927\" class=\"more-link\">Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Morgan Stanley Settles RMBS Case with FDIC Morgan Stanley (MS) will pay $62.9M to resolve allegations that it misrepresented residential mortgage-backed securities prior to the 2008 financial crisis. The deal was reached with the Federal Deposit Insurance Corp., which sued the investment bank on behalf of Colonial Bank in Alabama, Security Savings Bank in Nevada, [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3818,3752,3748,3787,3757],"tags":[2842,2641],"class_list":["post-5927","post","type-post","status-publish","format-standard","hentry","category-deutsche-bank","category-financial-firms","category-hedge-funds","category-morgan-stanley","category-mortgagebacked-securities","tag-residential-mortgage-backed-securities-fraud","tag-rmbs-fraud"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>RMBS Cases and Institutional Fraud: Morgan Stanley to Pay $62.9M, Hedge Funds File Lawsuit Against TWC Asset Management, and Deutsche Bank Must Contend With Allegations Claiming Investor Losses of $3.1B &#8212; Investor Lawyers Blog &#8212; February 3, 2016<\/title>\n<meta name=\"description\" content=\"Morgan Stanley Settles RMBS Case with FDIC Morgan Stanley (MS) will pay $62.9M to resolve allegations that it misrepresented residential mortgage-backed &#8212; February 3, 2016\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/rmbs-cases-and-institutional-f\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"RMBS Cases and Institutional Fraud: Morgan Stanley to Pay $62.9M, Hedge Funds File Lawsuit Against TWC Asset Management, and Deutsche Bank Must Contend With Allegations Claiming Investor Losses of $3.1B &#8212; Investor Lawyers Blog &#8212; February 3, 2016\" \/>\n<meta name=\"twitter:description\" content=\"Morgan Stanley Settles RMBS Case with FDIC Morgan Stanley (MS) will pay $62.9M to resolve allegations that it misrepresented residential mortgage-backed &#8212; February 3, 2016\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Shepherd Smith Edwards &amp; Kantas, LLP\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"RMBS Cases and Institutional Fraud: Morgan Stanley to Pay $62.9M, Hedge Funds File Lawsuit Against TWC Asset Management, and Deutsche Bank Must Contend With Allegations Claiming Investor Losses of $3.1B &#8212; Investor Lawyers Blog &#8212; February 3, 2016","description":"Morgan Stanley Settles RMBS Case with FDIC Morgan Stanley (MS) will pay $62.9M to resolve allegations that it misrepresented residential mortgage-backed &#8212; February 3, 2016","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.investorlawyers.com\/blog\/rmbs-cases-and-institutional-f\/","twitter_card":"summary_large_image","twitter_title":"RMBS Cases and Institutional Fraud: Morgan Stanley to Pay $62.9M, Hedge Funds File Lawsuit Against TWC Asset Management, and Deutsche Bank Must Contend With Allegations Claiming Investor Losses of $3.1B &#8212; 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