(Bloomberg) -- Allstate Insurance Co. agreed to settle a 2011 lawsuit accusing Morgan Stanley of fraud over more than $100 million worth of mortgage-backed securities in which the insurer invested.
The largest publicly traded U.S. home and auto insurer sued Morgan Stanley and other lenders in 2011, alleging they sold packages of risky home loans while claiming they conformed with “conservative” underwriting standards.
Northbrook, Illinois-based Allstate and New York-based Morgan Stanley have agreed to discontinue the suit, according to a Feb. 2 court filing in New York State Supreme Court.
“The lawsuit has been settled on mutually agreeable terms,” Allstate spokeswoman Maryellen Thielen said in an e-mail.
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.
Mark Lake, a spokesman for Morgan Stanley, declined to comment on the accord.
Other lenders sued by Allstate included Bank of America Corp.’s Merrill Lynch, Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. Allstate settled with Citigroup in May 2013, dropped the cases against Deutsche Bank, Goldman Sachs and JPMorgan that same year, and resolved its claims against Bank of America in April 2014.
The case is Allstate Insurance Co. v. Morgan Stanley, 651840/2011, New York State Supreme Court.
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