Illinois Reaches $22.5 Million Settlement With Morgan Stanley Over Risky Mortgage Investments
Investment firm Morgan Stanley will cough up $22.5 million to the state of Illinois as part of a settlement with the state for its "misconduct in its marketing and sale of risky residential mortgage-backed securities (RMBS) leading up to the 2008 economic collapse," according to Illinois Attorney General Lisa Madigan's office.
"This settlement is the latest effort in my ongoing commitment to recover critical funds for the state due to Wall Street's massive mortgage fraud," said Madigan, who launched an investigation into the bank's omission of the risks involved with RMBS investments.
The funds will be divvied up among state worker retirement funds, including the Teachers Retirement System of the State of Illinois, the State Universities Retirement System of Illinois, and the Illinois State Board of Investment, which manages the State Employees' Retirement System, General Assembly Retirement System and Judges' Retirement System.
"Today's settlement is the fourth such agreement Madigan has secured as part of her work on the Residential Mortgage-Backed Securities Working Group under President Obama's Financial Fraud Enforcement Task Force," reads a release from the state attorney general's office. "Madigan has reached similar agreements with JPMorgan Chase & Company for $100 million to Illinois' pension systems, with Citigroup for $44 million to the state's pension systems and an additional $40 million in consumer relief, and with Bank of America for a record $300 million, including $200 million to Illinois' pension systems and an additional $100 million in consumer relief."
Madigan has gone after several other financial institutions that contributed to the nation's 2008 economic collapse, resulting in several multi-million and multi-billion dollar settlements, including the national $25 billion settlement with Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Bank, formerly GMAC.