Morgan Stanley Sued by Sealink Over Mortgage Securities
Morgan Stanley (MS) was sued by Sealink Funding Ltd., which accused the bank of fraud in connection with more than $556 million in residential mortgage-backed securities.
Sealink, a fund created to manage Landesbank Sachsen AG’s riskiest assets after the German lender almost collapsed, filed the lawsuit in New York state Supreme Court in Manhattan on Jan. 20.
The securities were bought between 2006 and 2007 using information provided by Morgan Stanley, which said it had conducted due diligence on the lenders of the mortgages on which the investments were based and assured Sealink that the loans met underwriting standards and deserved the AAA ratings they were assigned, lawyers for Sealink said in a statement.
“In truth, and as Sealink and the world would only later discover, the originators whose loans collateralized the Morgan Stanley RMBS at issue were among the worst of the worst culprits in the subprime lending industry,” Sealink said in the lawsuit.
Copy of the complaint below…