Morgan Stanley pays $7.5 million to avoid trial

Morgan Stanley, owner of Saxon Mortgage, and other Wall Street firms agreed to pay $100 million to settle a lawsuit accusing them of propping up American Business Financial Services Inc.

A spokeswoman for Morgan Stanley, which agreed to pay $7.5 million, said the New York company wanted to “avoid a lengthy trial.”

Morgan Stanley stopped lending to ABFS in late 2001, after Kevin Rodman, a managing director who had questioned the note sales, forecast a possible “public relations nightmare.”