US bank Morgan Stanley has confirmed it has settled a major lawsuit relating to the sale of mortgage-backed securities.
The company revealed that it will pay $1.25 billion (£765.5 million) in order to settle the issue, with this money to be paid to the sector's regulator.
Morgan Stanley said its legal costs were "specifically litigation and investigations related to residential mortgage-backed securities and the credit crisis" and rivals such as Citigroup and JP Morgan have also been affected by this in recent weeks.
Despite the massive lawsuit being settled by the company, its share price rose slightly over the course of yesterday's trading session in the US. By the end of the session on the New York Stock Exchange, stocks were selling for 0.24 per cent higher than at the start of the day.
JP Morgan Chase and Deutsche Bank have already confirmed their own settlements with the Federal Housing Finance Agency in the last few weeks and as a result of the latest deal, Morgan Stanley revealed that it will be adding a further $150 million to its legal reserves.
Deutsche Bank said it would pay $1.9 billion to settle similar claims to those made against Morgan Stanley, while Citigroup paid $250 million when its case was finalised in December.
In November, JP Morgan Chase confirmed that it would be paying a record settlement to regulators in the US due to its role in misleading investors during the country's housing crisis.
"We are pleased to have concluded this extensive agreement," said JP Morgan boss Jamie Dimon, with $13 billion to be paid, which was the biggest ever settlement between a corporation and the government.
"The conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown," said Attorney General Eric Holder in a statement. JP Morgan has also confirmed that it is paying $4.5 billion in settlements over the mortgage securities scandal.
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