The company settled the agreement with the US Department of Justice, Civil Division and the US Attorney’s Office for the Northern District of California, Civil Division.
Morgan Stanley has increased legal reserves by about $2.8bn for the settlement, which lowered its income from continuing operations by $2.7bn in 2014.
The settlement has increased other expenses within the Institutional Securities business segment for the year ended 31 December 2014.
Though the company has agreed with the Civil Division over the arrangement, parties may not agree on the final documentation of the settlement, said media reports.
Earlier in July 2014, the company has announced its consent to pay $275m to settle allegations that its entities misled investors in a pair of residential mortgage-backed securities (RMBS) securitization.
Morgan Stanley, Morgan Stanley ABS Capital I, and Morgan Stanley Mortgage Capital were charged by the US Securities and Exchange Commission (SEC) for misstating the delinquency history of loans included in RMBS they underwrote, sponsored, and sold before financial crisis.
Reuters quoted Morgan Stanley spokesman Mark Lake as saying: "We’re pleased to settle the matter."
The US-based financial services company Morgan Stanley, which operates in 42 countries, has more than 1,300 offices and provides securities products and services to customers through its subsidiaries and affiliates.
The company operates in three business segments including Institutional Securities, Global Wealth Management Group, and Asset Management.
Image: Morgan Stanley’s office on Times Square. Photo: courtesy of .Jenix89
