Morgan Stanley had provisionally agreed to a $275m settlement with the US Securities and Exchange Commission over the sale of toxic mortgage backed bonds.
According to an SEC regulatory filing, Morgan Stanley is not required to admit any wrongdoing, despite the settlement in principle, but would be able to move on from the intense investigation that has seen dozens of banks stump up billions of dollars in fines.
At the beginning of this month, Morgan Stanley agreed to pay $1.25bn (£766m, €925m) to the US regulator for Fannie Mae and Freddie Mac related MBS and will add $150m to its legal reserves as a result of the settlement with the Federal Housing Finance Agency (FHFA).
The latest settlement will mean it can move on from costly investigations that stem from the financial crisis.
According to Morgan Stanley's latest set of financial results, the bank's legal costs more than doubled year on year, reaching $2bn in 2013, and accounted for nearly 17% of its total operating expenses, excluding compensation.
What is a Mortgage Backed Security?
MBS, also known as asset-backed securities (ABS), are financial products backed by a loan, lease or receivables against assets other than real estate.
They were largely to blame for the credit crisis of 2007 and 2008.