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December 30, 2009

Morgan Stanley Sued over Mortgage-Related Investments
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In business news, Morgan Stanley has been sued by a Virgin Islands
pension fund of defrauding investors by marketing risky mortgage-related
investments that it expected to fail. The suit focuses on Morgan
Stanley’s sale of collateralized debt obligations, or CDOs. According to
the lawsuit, “Morgan Stanley was betting the entire investment it was
promoting would fail.” Last week, the New York Times reported
investigators in Congress, at the Securities and Exchange Commission and
at the Financial Industry Regulatory Authority have launched probes into
Morgan Stanley, Goldman Sachs and other Wall Street firms for
deliberately selling these risky structured securities to clients and
then betting on the securities failing.



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