In a Form 10-Q filed with the Securities and Exchange Commission on Tuesday, Morgan Stanley disclosed that the office of California Attorney General Kamala Harris may sue the firm over money-losing mortgage bonds purchased by the state’s biggest public pension fund in a $1.3 billion deal before the financial crisis, Reuters reports.
In its filing, Morgan Stanley writes that Harris’s office has “indicated that it has made certain preliminary conclusions that the Company made knowing and material misrepresentations regarding RMBS [residential mortgage-backed securities] and that it knowingly caused material misrepresentations to be made regarding the Cheyne SIV [structured-investment vehicle], which issued securities marketed to the California Public Employees Retirement System.”
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