US bank must answer fraud charges

The financial services giant Morgan Stanley and two credit rating agencies have been told by a US court they must defend themselves against fraud charges brought by Abu Dhabi Commercial Bank (ADCB) over its ill-fated investments in subprime mortgages.

The ADCB alleged Morgan Stanley, Moody’s Investors Services and Standard & Poor’s masked the risks of an investment linked to subprime mortgages that eventually collapsed.

A US federal judge in New York rejected on Wednesday attempts by the three defendants to dismiss fraud claims brought by the ADCB and another plaintiff in the case, King County based in Washington state.