Insurance giant MetLife is suing Morgan Stanley for fraud.
The suit, filed in state court in New York on Wednesday, seeks $757 million over residential mortgage backed securities Morgan Stanley allegedly sold the insurance giant in 2006 and 2007, according to Bloomberg.
Morgan Stanley promised MetLife that the loans backing the securities had been issued on the basis of "specific underwriting guidelines" and that the properties backing the loans had been "accurately appraised," the suit alleges, according to Bloomberg.
The suit came only days after MetLife agreed to pay $500 million to settle a multi-state investigation into MetLife's claims practices, according to Reuters, part of what has been a busy week for the insurance giant: On Thursday it reported a first-quarter loss and said it was getting out of the reverse-mortgage business. And on Tuesday board member Eduardo Castro-Wright resigned after being described in a a New York Times report as "the driving force behind years of bribery" by Wal-Mart de Mexico.
This is not the first time Morgan Stanley has been sued for fraud over its mortgage-backed securities. In January, for example, Sealink Funding, a European fund, sued Morgan Stanley for fraud over $556 million in mortgage-backed securities Sealink bought between 2006 and 2007, according to Bloomberg. Last August, auto insurance company Allstate also sued the firm for $104 million it purchased in residential mortgage-backed securities between 2005 and 2007.
These suits are among a handful of high-profile cases against large Wall Street firms in the aftermath of the housing crash that have alleged fraud in relation to the sale of shoddy mortgage-backed securities. Most famously, perhaps, the Securities and Exchange Commission claimed fraud in a 2010 suit against Goldman Sachs over its Abacus 2007-AC1 investment vehicle that the SEC argued was designed to turn a profit at the expense of some investors. Goldman ultimately settled the suit with the SEC for a total of $550 million (though the suit opened the floodgates to other subsequent claims related to Abacus that are still being played out in courts).
Morgan Stanley spokeswoman Mary Claire Delaney declined to comment. MetLife could not immediately be reached for comment.