In its Form 10-K filed yesterday, Morgan Stanley disclosed that it has reached a tentative agreement with the staff of the SEC's Enforcement Division to resolve the agency's investigation into subprime RMBS transactions the firm sponsored and underwrote in 2007. Morgan Stanley stated that under the agreement, which has not yet been presented to, or accepted by, the Commission, the firm will pay disgorgement and penalties totaling $275 million. Morgan Stanley will not be required to admit the SEC's findings under the proposed agreement. The disclosure appears to signal the end of Morgan Stanley's distinction of being the only major bank to avoid paying a fine to the U.S. government related to its conduct leading up to the financial crisis. 

In November 2013, following a huge settlement with JPMorgan Chase and Goldman Sachs' disclosure that it might be on the hook for an additional $4 billion in financial crisis-related settlements, fines and legal fees, Morgan Stanley indicated that it did not believe its financial crisis-related costs would be "material" to its business. This led to a flurry of articles observing that despite their competitors' troubles, Morgan Stanley had somehow managed to stay "squeaky clean" and remain off of the SEC's webpage listing SEC Enforcement Actions Addressing Misconduct That Led to or Arose From the Financial Crisis.

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