A Virgin Islands pension fund filed a lawsuit last week against Morgan Stanley, alleging the bank defrauded investors by marketing $1.2 billion in notes that they knew were going to fail. According to the lawsuit, Morgan Stanley worked with a credit agency to bolster the ranking of the notes even though they were backed by low-quality, high-risk assets. The lawsuit seeks class-action status, and also seeks compensatory and punitive damages, among other remedies.