Cambridge Place, Cheyne Lawsuits Bedevil Morgan Stanley

May 10 2011 | 1:31pm ET

Morgan Stanley is suffering from a couple of new hedge fund legal headaches, the firm said yesterday.

In a regulatory filing trumpeting its settlement of a U.S. Bank lawsuit over a collateralized debt obligation for "substantially less" than the $274 million it feared, the investment bank disclosed a raft of other legal issues, including two stemming from the world of hedge funds.

Morgan Stanley said it has been sued—again—by Cambridge Place Investment Management, which accuses the firm of misleading it about mortgage-backed securities. The complaint, filed in February, alleges that Morgan Stanley and others "made untrue statements and material omissions" when Cambridge Place bought some $102 million in "certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans" issued, underwritten or sold by Morgan Stanley.

The lawsuit comes almost a year after Cambridge Place sued Morgan Stanley and dozens of other banks and brokerage, accusing them of misleading the hedge fund about subprime mortgage-linked securities. That litigation is separate from the lawsuit filed in February, Morgan Stanley said.

Concord, Mass.-based Cambridge Place is liquidating three hedge fund that invested in subprime mortgages.

Morgan Stanley also said that it faced another lawsuit, this one stemming from its purchase, with others of $983 million in securities issued by Cheyne Finance, a structured investment vehicle created by hedge fund Cheyne Capital. Cheyne Finance defaulted in September 2007.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.