Morgan Stanley 2014 Annual Report Download - page 48

compensatory and punitive damages. On April 22, 2014, the court denied the defendants’ motion to dismiss in
substantial part. On September 18, 2014, the Company filed a notice of appeal from the ruling denying
defendants’ motion to dismiss.
On March 7, 2013, the Federal Housing Finance Agency filed a summons with notice on behalf of the trustee of
the Saxon Asset Securities Trust, Series 2007-1, against the Company and an affiliate. The matter is styled
Federal Housing Finance Agency, as Conservator for the Federal Home Loan Mortgage Corporation, on behalf
of the Trustee of the Saxon Asset Securities Trust, Series 2007-1 v. Saxon Funding Management LLC and
Morgan Stanley and is pending in the Supreme Court of NY. The notice asserts claims for breach of contract and
alleges, among other things, that the loans in the trust, which had an original principal balance of approximately
$593 million, breached various representations and warranties. The notice seeks, among other relief, specific
performance of the loan breach remedy procedures in the transaction documents, unspecified damages,
indemnity, and interest.
On May 3, 2013, plaintiffs in Deutsche Zentral-Genossenschaftsbank AG et al. v. Morgan Stanley et al. filed a
complaint against the Company, certain affiliates, and other defendants in the Supreme Court of NY. The
complaint alleges that defendants made material misrepresentations and omissions in the sale to plaintiffs of
certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans.
The total amount of certificates allegedly sponsored, underwritten and/or sold by the Company to plaintiff was
approximately $694 million. The complaint alleges causes of action against the Company for common law fraud,
fraudulent concealment, aiding and abetting fraud, negligent misrepresentation, and rescission and seeks, among
other things, compensatory and punitive damages. On June 10, 2014, the court denied the defendants’ motion to
dismiss the case. On August 4, 2014, claims regarding two certificates were dismissed by stipulation. After these
dismissals, the remaining amount of certificates allegedly issued by the Company or sold to plaintiff by the
Company was approximately $644 million.
On May 17, 2013, plaintiff in IKB International S.A. in Liquidation, et al. v. Morgan Stanley, et al. filed a
complaint against the Company and certain affiliates in the Supreme Court of NY. The complaint alleges that
defendants made material misrepresentations and omissions in the sale to plaintiff of certain mortgage pass-
through certificates backed by securitization trusts containing residential mortgage loans. The total amount of
certificates allegedly sponsored, underwritten and/or sold by the Company to plaintiff was approximately
$132 million. The complaint alleges causes of action against the Company for common law fraud, fraudulent
concealment, aiding and abetting fraud, and negligent misrepresentation, and seeks, among other things,
compensatory and punitive damages. On October 30, 2014, the court granted in part and denied in part the
Company’s motion to dismiss. All claims regarding four certificates were dismissed. After these dismissals, the
remaining amount of certificates allegedly issued by the Company or sold to plaintiff by the Company was
approximately $116 million. On December 1, 2014, the Company filed a notice of appeal from the Court’s
October 30, 2014 decision.
On July 2, 2013, the trustee, Deutsche Bank became the named plaintiff in Federal Housing Finance Agency, as
Conservator for the Federal Home Loan Mortgage Corporation, on behalf of the Trustee of the Morgan Stanley
ABS Capital I Inc. Trust, Series 2007-NC1 (MSAC 2007-NC1) v. Morgan Stanley ABS Capital I Inc., and filed a
complaint in the Supreme Court of NY under the caption Deutsche Bank National Trust Company, as Trustee for
the Morgan Stanley ABS Capital I Inc. Trust, Series 2007-NC1 v. Morgan Stanley ABS Capital I, Inc. On
February 3, 2014, the plaintiff filed an amended complaint, which asserts claims for breach of contract and
breach of the implied covenant of good faith and fair dealing and alleges, among other things, that the loans in
the trust, which had an original principal balance of approximately $1.25 billion, breached various
representations and warranties. The amended complaint seeks, among other relief, specific performance of the
loan breach remedy procedures in the transaction documents, unspecified damages, rescission and interest. On
March 12, 2014, the Company filed a motion to dismiss the amended complaint.
July 8, 2013, plaintiff filed a complaint in Morgan Stanley Mortgage Loan Trust 2007-2AX, by U.S. Bank
National Association, solely in its capacity as Trustee v. Morgan Stanley Mortgage Capital Holdings LLC, as
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