Morgan Stanley Agrees to Pay $20 Million to West Virginia
April 26, 2011
Uptown -- Morgan Stanley Group Inc. agreed to pay West Virginia $20 million to settle a case in which the state sought to hold the firm liable for investment losses it incurred in 1986 and 1987, Morgan said in a press release. More than a year ago, the Supreme Court of West Virginia struck down lower-court decisions that had ordered Morgan to reimburse the state for as much as $60 million in losses. That ruling, in June 2010, sent the case back to be retried. But Morgan said in a statement Wednesday: ``For practical reasons, we don't believe it makes sense to return to the original court to litigate the case all over again. The events in question occurred 10 years ago and it is simply time to close the case and put it fully behind us.'' The investment bank said the settlement would have no adverse effect on its financial position. The case, filed in 1989, originally named eight other firms in addition to Morgan, attempting to hold them responsible for risky trading that led to losses of about $280 million in a West Virginia investment fund. All of the other firms settled years ago for a combined $28 million. The state maintained that Morgan had helped the investment fund engage in the risky activities knowing all along that they violated West Virginia law. Morgan held that it made no investment recommendations to state officials but simply executed the trades.
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