Morgan Stanley
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Morgan Stanley Template:Nyse is an investment bank and retail broker founded in New York on September 5, 1935, from the investment bank of J. P. Morgan & Co.. This split of the commercial and investment banks came as a result of the Glass-Steagall Act ([1] (http://www1.excite.com/home/careers/company_profile/0,15623,473,00.html)).
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Mergers, acquisitions, and divestitures
On February 5, 1997, the company announced a merger with Dean Witter Reynolds, the spun-off financial services business of Sears Roebuck. The merged company was briefly known as "Morgan Stanley Dean Witter Discover & Co." until 1998 and then "Morgan Stanley Dean Witter & Co." until late 2001. The current name of the firm is simply "Morgan Stanley".
Legal proceedings
Misleading financial analysis was disclosed amongst investment banks in the United Kingdom, but Sir Howard Davies, chairman of the UK Financial Services Authority, decided not to intervene. Davies was also an employee of the bank. In criminal activity in the US similar to that alleged in the UK, Morgan Stanley was fined $125 million.
On July 12, 2004, Morgan Stanley settled a sex discrimination suit brought by the Equal Employment Opportunity Commission for $54 million.
On January 12, 2005, The New York Stock Exchange imposed a $19 million fine on Morgan Stanley for alleged regulatory and supervisory lapses.
On May 16, 2005, A Florida jury found that Morgan Stanley did in fact fail to give adequate information to Ronald Perelman about Sunbeam thereby defrauding him and causing damages to him of $604 million. To that $604 million was added punitive damages by the jury for a total of compensatory and punitives damges of $1.450 billion.
Some assert that Morgan Stanley's defense to this trial was severely hindered by rulings that did not allow it to prove otherwise, the rulings caused by its refusal to provide documents for the trial. This case was seen as a significant mishandling on the firm's part, particularly by the 'dissidents' (see Disputes section below), who claim it as further evidence of Purcell's poor management.
Links to NY Times articles of 5/18/2005 and 5/20/2005: [2] (http://www.nytimes.com/2005/05/17/business/17perelman.html?pagewanted=2&th&adxnnl=1&emc=th&adxnnlx=1116331383-xHd7qJ3d+1lDKduJbL8QrQ) [3] (http://www.nytimes.com/2005/05/20/opinion/20fri4.html?th&emc=th)
Quick facts
- Chairman and CEO: Philip J. Purcell, who headed Dean Witter Discover, has been Chairman and CEO since the merger. He announced his retirement on June 13, 2005 (see "Recent (2005) disputes" below), and will leave the firm once a successor is named.
Recent disputes (2005)
Concerned over lackluster performance, eight former senior Morgan Stanley executives, including S. Parker Gilbert, who had been chairman of Morgan Stanley before the merger, and Robert Scott, who had been CEO, sent a letter to the Board on March 3, 2005, requesting immediate replacement of Purcell as CEO. On March 31, they published a full-page advertisement in the Wall Street Journal revealing their position.
The dispute, which the eight former executives claim represents a groundswell within the company, concerns Phil Purcell's alleged neglect for Morgan Stanley's traditional and most profitable institutionally ingrained business, investment banking.
Key to the firm's future was Joe Perella, the head of investment banking and former head of acquisitions at CSFB (Credit Suisse First Boston). (Perella joined Bruce Wasserstein to form the former "Wasserella" specialist firm dealing mainly in mergers and later sold to Dresdner Bank). Perella left Wasserella to join Morgan Stanley and managed the Investment Banking Division at Morgan Stanley for a time.
It was announced on April 13, 2005 that Perella was also leaving Morgan Stanley. [4] (http://money.cnn.com/2005/04/13/news/fortune500/morgan.stanley.reut/) Purcell retains support of the Morgan Stanley board, which some say he "packed".
On May 12, 2005, dissidents announced a plan to split up Morgan Stanley into two firms: one retail (as former Dean Witter) and one institutional firm (as former Morgan Stanley), saying Purcell's plans to merge these two entities has not worked over the past eight years. (See New York Times article, May 13, 2005.)
Purcell has announced plans to spin off the Discover Card division, a heavy earner for Morgan Stanley, as steadily hiking fees have increased profits while the number of card holders has remained the same.
CEO Purcell announced on June 13, 2005 that he will retire as CEO when a successor is found, but no later than March of 2006. It has not yet been determined whether he will retain his position on the board after retirement.
See [5] (http://money.cnn.com/2005/06/13/news/fortune500/moragnstanley_ceo/index.htm)
Debate continues over Purcell's strategy of keeping the firm as a "financial supermarket" to all investors (both retail and institutional). The focus of Morgan Stanley has historically been on institutional clients.
Zoe Cruz-current co president of Morgan Stanley-appears under consideration to take Purcell's place. A past head of fixed income, she has some 20 plus years of Wall street experience but is relatively unknown outside of Morgan Stanley.
Organization
Morgan Stanley is comprised of four main business units:
- Institutional Securities
- Individual Investor Group
- Investment Management
- Credit Services
It was announced in Q2 2005 that the Discover credit card unit would be spun off within the year, and remains likely even after the announcement of Purcell's retirement.
Diversity
- Morgan Stanley was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine.
- Family Digest magazine named Morgan Stanley one of the "Best Companies for African Americans" in June 2004
- Essence magazine named Morgan Stanley as one of the "30 Great Places to Work" in May 2004
- Asian Enterprise magazine named Morgan Stanley as one of the "Top Companies for Asian Americans" in April 2004
- Hispanic magazine selected Morgan Stanley as one of the "100 Companies Providing the Most Opportunities to Hispanics" in February 2004
See also
External links
- Morgan Stanley Homepage (http://www.ms.com/)
- Yahoo! - Morgan Stanley Company Profile (http://biz.yahoo.com/ic/15/15970.html)
- Group of Eight Homepage (http://futureofms.com/)
References
- Hibbard, J. (17 January 2005). Morgan Stanley: No stars—and lots of top tech IPOs. In BusinessWeek, 56 – 58.de:Morgan Stanley