April 8, 2013 – A federal appellate court denied the Pension Benefit Guaranty Corporation’s (PBGC’s) attempt to recover retirement plan losses from Morgan Stanley.
The 2nd U.S. Circuit Court of Appeals affirmed a United States District Court for the Southern District of New York ruling that the amended complaint fails to allege facts supporting the plausible inference that Morgan Stanley knew, or should have known, that the particular mortgage-backed securities in the relevant portfolio were imprudent investments. In particular, the complaint relies on the decline in the market price of mortgage-backed securities generally, without specifying the securities at issue or presenting any facts to suggest that a reasonable investor would have viewed those securities as imprudent investments.
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