MBIA's Morgan Stanley Subprime Suit Stays Alive

Law360, New York (May 27, 2011, 5:20 PM EDT) -- A New York judge on Thursday denied Morgan Stanley's motion to dismiss MBIA Inc.'s lawsuit alleging the investment bank misrepresented the quality of mortgages in a 2007 mortgage-backed securities offering, costing the insurer more than $71.2 million.

State court Judge Gerald E. Loehr ruled that MBIA's fraud claims against Morgan Stanley could survive because the troubled bond insurer did not have the ability to evaluate each of the mortgages that made up the security and was relying on the investment bank.

“Morgan Stanley originated or acquired...
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