Morgan Stanley agreed to pay $2.6 billion to resolve an investigation by the Department of Justice into its mortgage-backed securities deals, said an 8-K filed by the company Wednesday.
Morgan Stanley had increased legal reserves for this settlement and other legacy residential mortgage-backed securities matters by about $2.8 billion, which increased other expenses within the institutional securities business segment for year ended Dec. 31.
The filing stated that this decreased income from continuing operations by $2.7 billion and diluted earnings per share from continuing operations by $1.35 for the year ended Dec. 31.
The deal has not yet been finalized. DOJ spokesman Patrick Rodenbush declined to comment.
Morgan Stanley spokesman Matt Burkhard declined to comment beyond what was in the 8-K.