Morgan Stanley Reaches $127M ARS Deal In Colo.

Law360, New York (March 15, 2011, 7:28 PM EDT) -- Morgan Stanley has reached an accord with Colorado’s securities regulator over its treatment of auction rate securities, agreeing to repurchase $127 million of the long-term debt issues from investors.

The settlement, announced Tuesday by the Colorado Division of Securities, lays to rest a probe into allegations that Morgan Stanley advised certain clients that ARS were safe liquid and short-term investments.

In fact, ARS are bonds with long-term maturities, and their short-term liquidity was dependent upon the success of the auction process, the regulator said.

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