Pension fund sues Morgan Stanley over CDO of ABS, reports Reuters

Reuters reported last week that a Virgin Island’s pension fund is suing Morgan Stanley over CDOs it bought from the investment bank. According to the article the Employees' Retirement System of the Government of the Virgin Islands complains that the bank knew that the ABS-backed CDOs were riskier than their triple A ratings implied. The deal is named in the article as Libertas. This is a series of CDOs of mezzanine ABS managed by Cohen unit Strategos and which were arranged by a number of different investment banks. Libertas Preferred Funding III, which closed in March 2007, was arranged by Morgan Stanley.