By Justin Baer 

Morgan Stanley agreed to pay $2.6 billion to settle U.S. claims stemming from the sale of mortgage bonds, the Wall Street firm said Wednesday in a regulatory filing.

Morgan Stanley upped its legal reserves by about $2.8 billion, and accounted for the costs in the 2014 results of its securities business, according to the filing. The higher reserves in turn cut the firm's 2014 income from continuing operations by $2.7 billion, or $1.35 a share.

The firm reached the agreement in principle with the U.S. Department of Justice, and the U.S. Attorney's Office, Northern District of California.

Write to Justin Baer at justin.baer@wsj.com

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