WSJ: Feds Probing Morgan Stanley’s CDO Dealings (MS)

Filed in ceo, dividend, Gold, Gold Bullion prices, shares by on May 12, 2010 0 Comments

According to a Wall Street Journal report, financial services giant Morgan Stanley ( MS ) is coming under federal investigation as to whether the firm may have misled investors regarding certain mortgage derivative products. CEO James Gorman denied any knowledge of the investigation Tuesday, saying that “We have not been contacted by the Justice Department about any transactions that were raised in the Wall Street Journal article.” However, the Wall Street Journal reports indicate that the Justice Department is probing the company’s alleged practice of helping design two particular CDO deals, and then at times betting against the value of those deals. Morgan Stanley shares fell $1.18, or -4.2%, in premarket trading Wednesday. The Bottom Line We had removed shares of MS last Oct.1, when the stock was trading at $30.88. Shares of MS have a dividend yield of .70%, based on last night’s closing stock price of $28.38. The stock has technical support in the $25-$26 price area. If the shares can firm up, we see overhead resistance around the $32 price level. We would remain on the sidelines for now. Morgan Stanley ( MS ) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars. Be sure

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WSJ: Feds Probing Morgan Stanley’s CDO Dealings (MS)

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