The Zacks Analyst Blog Highlights:Morgan Stanley, Citigroup, Goldman Sachs Group, JPMorgan Chase and General Motors

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Feb 27, 2014, 09:30 ET

CHICAGO, Feb. 27, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Morgan Stanley (NYSE:MS-Free Report), Citigroup Inc. (NYSE:C-Free Report), Goldman Sachs Group, Inc. (NYSE:GS-Free Report), JPMorgan Chase & Co. (NYSE:JPM-Free Report) and General Motors Co. (NYSE:GM-Free Report).

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Here are highlights from Wednesday's Analyst Blog:

Morgan Stanley to Settle with SEC

Morgan Stanley (NYSE:MS-Free Report), in an attempt to end an ongoing investigation against its sub-prime mortgage business, has agreed to pay a tentative sum of $275 million to the Securities and Exchange Commission (SEC). However, nothing is confirmed officially as the SEC has yet to finalize the amount.

The proposed settlement fee takes into account profits generated from the sale of mortgage-backed loans and securities by Morgan Stanley during the pre-crisis period. Further, it considers penalties the bank has to pay as compensation for the losses which investors had to bear due to its malpractices.

In the pre-crisis period, major banks like Morgan Stanley often indulged in faulty lending activities and resorted to risky ventures to maximize profits without considering investors' security.

However, the regulatory environment in the U.S. tightened following the crisis with the controversial activities of banks including like Morgan Stanley, Citigroup Inc. (NYSE:C-Free Report), Deutsche Bank AG, The Goldman Sachs Group, Inc. (NYSE:GS-Free Report) and JPMorgan Chase & Co. (NYSE:JPM-Free Report) coming into focus. Since then, these Wall Street biggies have been facing a tough time as they seem to be trapped in the never ending process of lawsuits and settlements.

In 2013, Morgan Stanley paid a hefty sum of $1.95 billion as settlement fees, which weighed heavily against the company's earnings. Going forward, there appears to be little hope of respite as the company will likely continue to face regulators' fury.

Nevertheless, the recent settlement fee will not impact earnings in the forthcoming quarters as the company had already set aside reserves in the last quarter.

Currently, Morgan Stanley carries a Zacks Rank #3 (Hold).

GM Recalls More Vehicles

General Motors Co. (NYSE:GM-Free Report) announced a recall of 842,000 2003-2007 Saturn Ions, 2006-2007 Chevrolet HHRs, and 2006-2007 Pontiac Solstice and Saturn Sky models in addition to the recent recall of 778,562 Chevrolet Cobalt and 2005-2007 Pontiac G5 compact cars in North America. With this, the company is recalling 1,367,146 vehicles in total to fix faulty ignition switches which may lead to sudden shutdown of the engine, causing near-fatal crashes.

According to General Motors, a heavy key ring or uneven roads can cause the ignition switch to shift away from the run position, thus turning off the engine and electrical power. In such a situation, the front air bags will not be deployed in case of a crash. At present, there are reports of 31 crashes with 13 front-seat fatalities caused by collisions due to this problem.

General Motors is focused on resolving the issue and is trying to increase the production and supply of parts. The company will be informing customers though customer care centers and social media teams. It will also rectify the fault at no extra charge.

General Motors notified that dealers will replace the ignition switch to prevent the involuntary key movement. Until the replacement is done, customers have been advised to use only the ignition key without anything else on the key ring. Moreover, customers should use their safety belts.

Recently, General Motors has been accused of delaying the recall of Chevrolet Cobalt and Pontiac G5 cars. The problem was allegedly detected in 2004, before the launch of the 2005 Chevrolet Cobalt, while the recall was announced earlier this month.

General Motors had earlier attempted to avoid a recall by issuing Technical Service Bulletins for the problem. The statement advised putting an insert into the ignition switch of the Chevrolet HHR and Cobalt, Pontiac Solstice and G5 and Saturn Sky and Ion vehicles.

Lawfully, the automakers are supposed to alert the National Highway Traffic Safety Administration (NHTSA) about any safety concerns in vehicles within five business days of recognizing the problem. The maximum fine for late reporting currently stands at $35 million. On Feb 24, General Motors submitted a detailed chronology associated with its recall of Chevrolet Cobalt and Pontiac G5 to the NHTSA.

General Motors currently holds a Zacks Rank #5 (Strong Sell).

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