Sept 23 (Reuters) - A U.S. regulator filed lawsuits againstMorgan Stanley and eight other banks over the sale ofnearly $2.4 billion in mortgage-backed securities to two creditunions that later failed, according to a filing.
Morgan Stanley and Morgan Stanley Capital I Inc, Barclays, JPMorgan Chase & Co's unit Bear Stearns,Credit Suisse Group, Royal Bank of Scotland Group and UBS sold faulty securities to Southwestand Members United corporate credit unions, the National CreditUnion Administration (NCUA) said in its complaint.
Goldman Sachs Group Inc, Wachovia Corp, a unit ofWells Fargo & Co and Residential Funding Securities LLC,now Ally Securities, also sold faulty securities to Southwest,NCUA said.
"We continue to pursue accountability and recovery in thewake of billions of dollars in sales of faulty securities thatled to the collapse of several corporate credit unions andhanded the industry the costly bill of paying for the losses,"NCUA Board Chairman Debbie Matz said.
Southwest and Members United corporate credit unions paidmore than $416 million for the securities in question in theMorgan Stanley suit and more than $1.9 billion for securitiessold by the other defendants.
The NCUA lawsuits filed in the Manhattan district court saythe banks made misrepresentations in connection with theunderwriting and subsequent sale of the mortgage-backedsecurities.
NCUA's complaints also allege that the offering documents ofthe securities sold to the failed corporate credit unionscontained statements that were not true or omitted materialfacts.
The banks had "abandoned the stated underwriting guidelinesin the offering documents," according to the complaints, withthe result that the securities were significantly riskier thanrepresented.
None of the banks could immediately be reached for comment.