NU Online News Service, Dec. 9, 3:24 p.m. EST
Morgan Stanley became the sixth financial institution to be sued by guarantee insurer MBIA Insurance Corp.
Morgan Stanley defrauded the insurer when purchasing insurance for its mortgage backed securities, MBIA claimed in a lawsuit.
The Armonk, N.Y.--based guarantee insurer filed suit in the Supreme Court of the State of New York in Westchester County, claiming Morgan Stanley created a pool of approximately 5,000 residential mortgages and sold them as mortgage-backed securities to another unit within Morgan Stanley. The company then purchased insurance from MBIA in excess of $223 million.
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