NEW YORK Aug 5 California's attorney general
may sue Morgan Stanley over its alleged
misrepresentations of mortgage bonds before the financial
crisis, the bank said in a securities filing on Tuesday.
The state's top lawyer "indicated that it has made certain
preliminary conclusions that the company made knowing and
material misrepresentations regarding (residential
mortgage-backed securities," Morgan Stanley said in its 10-Q
filing with the U.S. Securities and Exchange Commission.
The attorney general also indicated "that it believes the
company's conduct violated California law and that it may seek
treble damages, penalties and injunctive relief," Morgan Stanley
said. The bank said it disagrees with the findings and presented
The alleged misrepresentations pertain to a structured
investment vehicle called Cheyne Finance LLC, which went
bankrupt in 2007. California's state pension fund, known as
CalPERS, bought $1.3 billion worth of the vehicle.
Spokespeople for Morgan Stanley and California Attorney
General Kamala Harris did not immediately have a comment on the
(Reporting by Lauren Tara LaCapra; Editing by Chris Reese)