Interesting ACLU case

Posted by & filed under Accounting Principles, Advanced Accounting, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting.

The ACLU is filing suit against Morgan Stanley, alleging that the company targeted African American borrowers in risky loan offerings. The ACLU claims that Morgan Stanley is culpable for predatory loan offered through the New Century Financial Corporation, who is a now-defunct subprime lender, because Morgan Stanley pressured New Century to make these troublesome loans to this demographic group of borrowers who could not afford them.

Questions:
1. Explain the actions that suit alleges Morgan Stanley performed which went beyond the role of a traditional investment bank.
2. What violated Acts are part of class action suits against Morgan Stanley?
3. What were some of the mortgage terms? How do these compare with most terms during that time period. Research the specifics.
4. What other banks have been accused of similar violations? Discuss the cases.

Source:
Silver-Greenberg, J. (2012). A.C.L.U. Sues Morgan Stanley Over Mortgage Loans. The New York Times, Oct. 15 (Retrievable online at http://www.nytimes.com/2012/10/15/business/aclu-to-sue-morgan-stanley-over-mortgage-loans.html?_r=0#h[])