Bloomberg News

Morgan Stanley Sued by Dutch Pension Fund Over Securities

November 29, 2012

Morgan Stanley was sued in New York by Stichting Pensioenfonds ABP, the Netherlands’ biggest pension fund, which claimed fraud over residential mortgage-backed securities.

Stichting, based in Heerlen, Netherlands, sued yesterday in New York State Supreme Court in Manhattan, saying it relied on “false and misleading” statements made by Morgan Stanley when it bought the securities. The pension fund said it suffered unspecified “substantial” damages.

“Based on these material misrepresentations and omissions, ABP purchased securities that were far riskier than had been represented, backed by mortgage loans worth significantly less than had been represented, and that had been made to borrowers who were much less creditworthy than had been represented, and at prices far in excess of the true value of the certificates,” Stichting said in its 125-page complaint.

Mark Lake, a Morgan Stanley (MS:US) spokesman, declined to comment on the lawsuit.

The pension fund has sued other banks in the same court over similar allegations, including Deutsche Bank AG, Credit Suisse Group AG, JPMorgan Chase & Co. and Goldman Sachs Group Inc.

Pools of home loans securitized into bonds were a central part of the housing bubble that helped send the U.S. into the biggest recession since the 1930s. The housing market collapsed, and the crisis swept up lenders and investment banks as the market for the securities evaporated.

The Netherlands has the euro area’s biggest pension industry, with 950 billion euros ($1.25 trillion) in assets at the end of the second quarter, data from the Dutch and European central banks show.

The assets are held in collective plans run by industry, company and occupational pension funds. APG Groep manages 314 billion euros for pension funds including Stichting Pensioenfonds ABP, which said in today’s complaint that it has about 250 billion euros in assets under management.

The case is Stichting Pensioenfonds ABP v. Morgan Stanley, 654130/2012, New York State Supreme Court, New York County (Manhattan.)

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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