In its Form 10-K filed yesterday, Morgan Stanley disclosed that it has reached a tentative agreement with the staff of the SEC’s Enforcement Division to resolve the agency’s investigation into subprime RMBS transactions the firm sponsored and underwrote in 2007. Morgan Stanley stated that under the agreement, which has not yet been presented to, or accepted by, the Commission, the firm will pay disgorgement and penalties totaling $275 million. Morgan Stanley will not be required to admit the SEC’s findings under the proposed agreement. The disclosure appears to signal the end of Morgan Stanley’s distinction of being the only major bank to avoid paying a fine to the U.S. government related to its conduct leading up to the financial crisis.
