Legal Woes Hit Morgan Stanley

Federal prosecutors are targeting investment firm Morgan Stanley over whether it had misled investors about its role in a pair of derivatives deals tied to mortgage-backed securities, according to reports on Wednesday.

According to the Wall Street Journal, Morgan Stanley bet against the performance of the deals. But according to the firm, it had not received a Wells Notice from the Securities and Exchange Commission, meaning that no charges were imminent against the company.

In Tokyo, on Wednesday, Morgan Stanley CEO James Gorman told reporters, “We have no reason to believe there is any substance behind any supposed investigation.”