A lawsuit filed by Deutsche Bank National Trust Co. might cause Morgan Stanley (NYSE:MS) a fine of $290 million. As per the reports, the information was shared by the Morgan Stanley on Monday stating that it could lose over $290 million. It was due to a lawsuit filed by Deutsche Bank over the quality of Wall Street’s mortgages worth $735 million.
Road So Far:
It’s not the first time when Morgan Stanley has been troubled by other financial institutions. As per the reports, the lawsuit was filed by Deutsche Bank in April 2014 stating that Morgan Stanley had wrongfully represented the quality of the loans. The information was revealed by this leading U.S. bank in one of its regulatory filings.
All the loans were in a trust that was backed by Morgan Stanley. It was the same entity in which Deutsche bank’s one of the subsidiaries was acting as a trustee. The senior management of Morgan Stanley tried everything possible to get rid of this allegation, but couldn’t be succeeded. Morgan Stanley stated lately that the Southern District of New York court had straightforwardly refused to dismiss the case in the previous month.
The judgment given by the court has enhanced the problems for Morgan Stanley which anticipates a total loss of around $292 million excluding various other costs. The amount is likely to go a lot higher than what it’s now. No senior management employee of the company has come forward and commented on this issue directly. Both Morgan Stanley and Deutsche Bank are waiting for the court’s final decision before any further step can be taken.
Experts call it an adverse situation for Morgan Stanley and anticipate that it will have long lasting effects on company’s market share as well as its image among all the stakeholders. Morgan Stanley (NYSE:MS) will take some time to get rid of the after-effects of this issue.