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February 5, 2014

Morgan Stanley restates earnings on $1.3bn loan settlement

“Morgan Stanley has been forced to restate its fourth-quarter earnings after agreeing a $1.3bn settlement with a US regulator over $11bn in mortgage-backed securities it sold to Fannie Mae and Freddie Mac.

“The bank cut its quarterly earnings per share from 7 cents to 2 cents after it announced on Tuesday it has struck a deal with the Federal Housing Finance Agency.

“Morgan Stanley said in a regulatory filing it would add $150m to its legal reserves, prompting it to restate earnings. The bank had already booked $1.2bn of litigation costs in the fourth quarter.

“Morgan Stanley follows other banks, including JPMorgan Chase, Deutsche Bank and UBS, which have settled with the FHFA over soured mortgage-backed securities sold in the lead-up to the financial crisis.”


Read full Financial Times article here

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