NEW YORK Nov 4 American International Group Inc
may file a lawsuit against Morgan Stanley related
to $3.7 billion worth of mortgage securities that the investment
bank sponsored or underwrote from 2005 to 2007, and which AIG
purchased, according to a regulatory filing on Monday.
AIG has terminated a "tolling agreement" with Morgan
Stanley, which allowed the companies to try to settle their
dispute out of court. The termination will be effective
Thursday, according to Morgan Stanley's 10-Q filing with the
U.S. Securities and Exchange Commission.
A Morgan Stanley spokesman declined to comment. A spokesman
for AIG did not immediately respond to requests for comment.
In August 2011, the insurer filed a $10 billion lawsuit
against Bank of America Corp, accusing the bank of
"massive" mortgage fraud. Bank of America has denied any
wrongdoing. The lawsuit is working its way through multiple
Although Morgan Stanley set aside less money last quarter
for legal expenses, so far this yet it has accrued an additional
$549 million for litigation costs, up 44 percent from the $381
million it accrued in the first nine months of 2012.