Feb 4 (Reuters) - Morgan Stanley said it would pay $1.25 billion to the U.S. regulator for Fannie Mae and Freddie Mac to settle a lawsuit over mortgage-backed securities.
The Wall Street bank will add $150 million to its legal reserves as a result of the settlement with the Federal Housing Finance Agency, Morgan Stanley disclosed in a regulatory filing on Tuesday. ()
The addition to reserves will reduce Morgan Stanley's earnings from continuing operations by 5 cents for the fourth quarter.
Morgan Stanley reported stronger-than-expected fourth quarter results on Jan. 17.