Allstate Targets Morgan Stanley Over MBS

Law360, New York (July 6, 2011, 8:23 PM EDT) -- Allstate Insurance Co. filed suit in New York on Tuesday accusing Morgan Stanley of knowingly selling high-risk residential mortgage-backed securities to investors, the insurance company's latest action against a major investment bank in its attempt to recover losses from the housing market collapse.

Allstate said Morgan Stanley and several of its affiliates packaged loans that it knew were issued to people who could never repay them, and sold them in the form of mortgage-backed securities to investors who lost billions of dollars when they defaulted....
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