The Wall Street Journal is reporting that federal investigators have launched a probe into whether Morgan Stanley misled investors about mortgage derivative deals it help design.
According to the WSJ, Morgan Stanley helped design the deals and then bet against them. Two of the deals that have come under scrutiny are so-called “Dead presidents’ deals” named after ex-presidents Buchanan and Jackson.
Apparently the report came as a surprise to Morgan CEO James Gorman, who told the press that he had no knowledge of the investigation and claimed that the firm had not been contacted by the Justice Department.
The new probe spawned from an SEC investigation launched in 2009 to examine the mortgage-bond business according to an unnamed source familiar with the matter.
It unclear what exactly the probe will find, but now that probes have been launched into mortgage-backed securities dealings at Morgan Stanley and Goldman-Sachs, one has to wonder if all of Wall Street will soon see similar probes as it did in the auction rate securities debacle.
If you were mislead by Morgan Stanley we would like to hear about it. Our investment fraud attorneys are here to fight to recover our clients' funds that were lost due to investment fraud. Contact us today for free consultation with one our experienced investment fraud lawyers.