NU Online News Service, July 7, 2:12 p.m.EDT

Allstate Corp. has added to its tally of New York lawsuitsseeking to recover investment losses on residential mortgage-backedsecurities with a filing against Morgan Stanley.

“We allege that the offering documents contained untruestatements and omitted material facts,” says Allstate in anemail.

The Northbrook, Ill.-based insurer has filed similar lawsuits against Countrywide, Citigroup, Deutsche Bank,Credit Suisse, Merrill Lynch and J.P. Morgan Chase.

In each lawsuit Allstate seeks damages, including rescission,monetary losses, attorneys’ fees, other costs and interest.

This most recent lawsuit, filed July 5 in state Supreme Court inManhattan, alleges that between 2005 and 2007, Allstate bought morethan $104 million in mortgage-backed securities from Morgan Stanleyand its affiliates, which misrepresented the quality of themortgages.

Allstate says Morgan Stanley assured the company that it hadconducted due diligence on the mortgage originators and the loansissued before Morgan Stanley purchased them for securitization,according to court documents.

“In truth, the originators whose loans collateralized the MorganStanley [residential mortgage-backed securities] purchased byAllstate were among the worst of the worst culprits in the subprimelending industry,” alleges Allstate in the suit.

A handful of the mortgage originators have filed for bankruptcy,been shut down, and are the subject of private lawsuits andinvestigations by the government, Allstate says.

Additionally, interviews Allstate did with former Morgan Stanleyemployees reveal that the global financial-services firm “was wellaware of the poor quality of the loans it purchased, securitizedand sold to Allstate,” according to the complaint.

Allstate’s suit against J.P. Morgan Chase & Co. is over morethan $750 million in mortgage-backed securities purchased. Theinsurer has another lawsuit against Bank of America’s CountrywideFinancial Corp., seeking damages related to its purchases of morethan $700 million in mortgage-backed securities from thecompany.