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Morgan Stanley

Morgan Stanley
Public
Traded as NYSE: MS
S&P 500 Component
Industry Financial services
Founded 1935 (1935)
Founder Henry Sturgis Morgan,
Harold Stanley
Headquarters Morgan Stanley Building,
New York City, New York, U.S.
Area served
Worldwide
Key people
James P. Gorman
(Chairman & CEO)
Thomas Nides
(Vice Chairman)
Products Investment banking, asset management, commercial banking, prime brokerage, investment management,
retail brokerage, commodities
Revenue Increase US$ 37.95 billion (2014)[1]
Increase US$ 3.591 billion (2014)[1]
Increase US$ 3.467 billion (2014)[1]
Total assets Decrease US$ 801.5 billion (2014)[1]
Total equity Increase US$ 70.90 billion (2014)[1]
Number of employees
55,802 (2014)[1]
Website .comMorganStanley
Footnotes / references
[2][3]

Morgan Stanley (Jamie Dimon refused the offer.[24]

Morgan Stanley and Goldman Sachs, the last two major investment banks in the US, both announced on September 22, 2008 that they would become traditional bank holding companies regulated by the Federal Reserve.[25] The Federal Reserve's approval of their bid to become banks ended the ascendancy of securities firms, 75 years after Congress separated them from deposit-taking lenders, and capped weeks of chaos that sent Lehman Brothers Holdings Inc. into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp.[26]

  • Official website
    • Business data for Morgan Stanley:
  • Hoover's
  • Reuters
  • SEC filings

External links

  • Patricia Beard (2008). Blue Blood and Mutiny: The Fight for the Soul of Morgan Stanley.

Further reading

  • Chernow, Ron (1990). The House of Morgan.
  • Hibbard, J. (January 17, 2005). "Morgan Stanley: No stars—and lots of top tech IPOs". BusinessWeek, 56–58.
  • John Mack Elected Chairman and CEO of Morgan Stanley
  • Partnoy, Frank. F.I.A.S.C.O. New York: Penguin Books, 1997.

References

  1. ^ a b c d e f Morgan Stanley Form 10-K, Securities and Exchange Commission, February 25, 2014
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  4. ^ "Contact Us". Morgan Stanley. Retrieved on August 28, 2009.
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  8. ^ a b c d
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  14. ^ Chief Will Leave Morgan Stanley, Ending Struggle. The New York Times, June 14, 2005
  15. ^ the Group of Eight
  16. ^
  17. ^ The Reward for Leaving: $113 Million. The New York Times, July 8, 2005
  18. ^
  19. ^
  20. ^ Patterson, Scott D., The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, Crown Business, 352 pages, 2010. ISBN 0-307-45337-5 ISBN 978-0307453372 Amazon page for book. Specifically in an excerpt from "Chapter 10: The August Factor", in the January 23, 2010 Wall Street Journal.
  21. ^
  22. ^
  23. ^ Morgan Stanley perplexes Wall Street as bank loses $20bn, The Times (London), September 19, 2008
  24. ^ Duff McDonald, Last Man Standing (2009)
  25. ^ Wall Street in crisis: Last banks standing give up investment bank status, The Guardian (London), September 22, 2008
  26. ^ Goldman, Morgan Stanley Bring Down Curtain on an Era, Bloomberg, September 22, 2008
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  36. ^ a b
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  39. ^ Press Release. Morgan Stanley (January 13, 2009). Retrieved on July 19, 2013.
  40. ^ Griffin, Donal. (May 31, 2012) Morgan Stanley Will Buy More of Smith Barney From Citigroup. Businessweek. Retrieved on July 19, 2013.
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Notes

See also

Notable alumni

The Morgan Stanley World Headquarters are located in New York City, the European headquarters are based in London and Asia Pacific Headquarters are based in both Hong Kong and Tokyo. [78][79]

Global and other headquarters

Board of Directors:

  • James P. Gorman: Chairman and Chief Executive Officer
  • Jonathan Pruzan: Chief Financial Officer and Executive Vice President
  • Jeff Brodsky: Global Head of Human Resources
  • Robert Rooney: Global Co-Head of Fixed Income Sales and Trading
  • Michael Heany: Global Co-Head of Fixed Income Sales and Trading
  • Greg Fleming: President of Investment Management, President of Morgan Stanley Smith Barney
  • Eric Grossman: Chief Legal Officer
  • Keishi Hotsuki: Chief Risk Officer
  • Ted Pick: Global Head of Institutional Sales and Trading
  • Jim Rosenthal: Chief Operating Officer
  • Colm Kelleher: President, Institutional Securities

Operating Committee:

List of officers and directors

In September 2014, Morgan Stanley agreed to pay $95 million to resolve a lawsuit pursued by the Public Employees' Retirement System of Mississippi (MissPERS) and the West Virginia Investment Management Board. Morgan Stanley was accused of misleading investors in mortgage-backed securities.[77]

2014

On August 7, 2012, it was announced that Morgan Stanley would have to pay $4.8 million in fines in order to settle a price fixing scandal, which has been estimated to have cost New Yorkers $300 million to date. Morgan Stanley has currently made no admission of any wrongdoing; however, the Justice department commented that they hoped this would "send a message to the banking industry".[76]

[75] Morgan Stanley agreed to pay a $5 million fine to the

Morgan Stanley is facing lawsuits and government investigation surrounding the [74]

Morgan Stanley was fined $55,000 by Nasdaq OMX for three separate violations of exchange rules. A Morgan Stanley client algorithm started buying and selling enormous volumes by mistake. Furthermore, after the exchange detected the error, they were unable to contact the employee responsible.[72] Morgan Stanley settled a claim from FINRA and paid restitution together totaling almost $2.4 million. Morgan Stanley was accused of improperly supervising and training financial advisors in the use of non-traditional ETF products. This resulted in inappropriate recommendations to several of its retail brokerage customers.[73]

Garth R. Peterson, one of Morgan Stanley’s highest-ranking real estate executives in China pleaded guilty on April 25 to violating U.S. federal anticorruption laws. He was charged with secretly acquiring millions of dollars’ worth of property investments for himself and a Chinese government official. The official steered business to Morgan Stanley.[71]

On April 3, the Federal Reserve announced Consent Order against the firm "a pattern of misconduct and negligence in residential mortgage loan servicing and foreclosure processing." The consent order requires the firm to review foreclosure proceedings conducted by the firm. The firm will also be responsible for monetary sanctions. [70]

2012

The Department of Justice sought a $4.8 million fine from Morgan Stanley for its part in an electricity price-fixing scandal. Con Edison estimated that the crime cost New York state consumers about $300 million. Morgan Stanley earned revenues of $21.6 million from the fraud.[69]

A Morgan Stanley trader was barred from the brokerage industry and fined for entering fake trades to fool firm risk management systems causing millions in losses.[68]

2011

In April, the Commodity Futures Trading Commission announced the firm agreed to pay $14 million related to an attempt to hide prohibited trading activity in oil futures.[67]

2010

[66] Morgan Stanley managing director Du Jun was convicted of

The Financial Services Authority fined the firm £1.4m for failing to use controls properly relating to the actions of a rogue trader on one of its trading desks. Morgan Stanley admitted on June 18, 2008 this resulted in a $120m loss for the firm.[65]

In May 2009, a trader at the firm was suspended by the FSA for a series of unauthorized commodities trades entered after becoming intoxicated during a three and half hour lunch.[63] A week later another trader at the firm was banned for deliberately disadvantaging clients by 'pre-hedging' trades without their consent.[64]

In March 2009, FINRA announced Morgan Stanley was to pay more than $7 million for misconduct in the handling the accounts of 90 Rochester, NY-area retirees. [62]

2009

Under a settlement with New York Attorney General Andrew M. Cuomo, the firm agreed to repurchase approximately $4.5 billion worth of auction rate securities. The firm was accused of misrepresenting auction rate securities in their sales and marketing.[61]

2008

In August 2007, Morgan Stanley was fined $1.5 million and paid $4.6 million in restitution to customers related to excessive mark-ups in 2,800 transactions. An employee was charged $40,000 and suspended for 15 days.[60]

[59] The

2007

On September 25, 2009, Citigroup Inc. filed a federal lawsuit against Morgan Stanley, claiming its rival failed to pay $245 million due under a credit default swap agreement. The breach-of-contract lawsuit was filed in Manhattan federal court and seeks unspecified damages.[57]

In May the firm agreed to pay a $15 million fine. The Securities and Exchange Commission accused the firm of deleting emails and failing to cooperate with SEC investigators.[56]

Morgan Stanley settled a class action lawsuit on March 2, 2006. It had been filed in California by both current and former Morgan Stanley employees for unfair labor practices instituted to those in the financial advisor training program. Employees of the program had claimed the firm expected trainees to clock overtime hours without additional pay and handle various administrative expenses as a result of their expected duties. A $42.5 million settlement was reached and Morgan Stanley admitted no fault.[55]

2006

[54] On May 16, 2005, a Florida jury found that Morgan Stanley failed to give adequate information to

The New York Stock Exchange imposed a $19 million fine on January 12, 2005 for alleged regulatory and supervisory lapses. At the time, it was the largest fine ever imposed by the New York Stock Exchange.[53]

2005

In December 2004, the firm paid a $100,000 to NASD and paid $211,510 in restitution to customers for failure to make proper disclosures to municipal bond investors. In the course of NASD's investigation, Morgan Stanley' failure make a timely response to requests for information resulted in censure and an additional $25,000 fine.[52]

In September 2004, the firm paid a $19 million fine imposed by NYSE for failure to deliver prospectuses to customers in registered offerings, inaccurate reporting of certain program trading information, short sale violations, failures to fingerprint new employees and failure to timely file exchange forms.[51]

In July 2004, the firm paid NASD a $2.2 million fine for more than 1,800 late disclosures of reportable information about its brokers.[50]

Morgan Stanley settled a sex discrimination suit brought by the Equal Employment Opportunity Commission for $54 million on July 12, 2004.[48] In 2007, the firm agreed to pay $46 million to settle a class action lawsuit brought by eight female brokers.[49]

In June 2004, the New York Stock Exchange (NYSE) imposed a penalty of a censure and $140,000 fine for incorrectly using customers’ margined securities as collateral for cash management loans.[47]

2004

In 2003, Morgan Stanley agreed to pay $125 million in order to settle its portion of a $1.4 billion settlement brought by Eliot Spitzer, the Attorney General of New York, the National Association of Securities Dealers (now the Financial Industry Regulatory Authority (FINRA)), the United States Securities and Exchange Commission, (SEC) and a number of state securities regulators, relating to intentionally misleading research motivated by a desire to win investment banking business with the companies covered.[46]

2003

Controversies and lawsuits

  • Morgan Stanley was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine.
  • Hispanic magazine selected Morgan Stanley as one of the "100 Companies Providing the Most Opportunities to Hispanics" in February 2004
  • Morgan Stanley is listed in The Times Top 100 Graduate Employers, only recently dropping out of the top 40
  • [44]
  • Great Place to Work Institute Japan in 2007 ranked Morgan Stanley as the second best corporation to work in Japan, based on the opinions of the employees and the corporate culture[45]

Magazine and popularity rankings

On September 29, 2013, Morgan Stanley announced a partnership with Longchamp Asset Management, a French-based asset manager that specialises in the distribution of UCITS hedge funds, and La Française AM, a multi-specialist asset manager with a 10-year track record in alternative investments.[43]

[42] It provides asset management products and services to institutional investors worldwide, including pension plans, corporations, private funds, non-profit organizations, foundations, endowments, governmental agencies, insurance companies and banks.

Investment Management

On January 13, 2009, the Global Wealth Management Group was merged with Citi's Smith Barney to form the joint venture Morgan Stanley Smith Barney. Morgan Stanley holds 51% of the entity, and Citi holds 49%.[39] As of May 31, 2012, Morgan Stanley planned to purchase an additional 14% of the joint venture from Citi.[40] In June 2013, Morgan Stanley stated it had secured all regulatory approvals to buy Citigroup's remaining 35% stake in Smith Barney and would proceed to finalize the deal.[41]

The Global Wealth Management Group provides [36] This segment provides financial and wealth planning services to its clients who are primarily high-net-worth individuals.

Wealth Management

[38] for Morgan Stanley in recent times. This business segment provides institutions with services such as capital raising and financial advisory services including [36] Institutional Securities has been the most profitable business segment

Institutional Securities Group

Morgan Stanley splits its businesses into three business units. As listed below:

Organization

In July 2014, Morgan Stanley’s Asian private equity arm announced it had raised around $1.7 billion for its fourth fund in the area.[35]

In November 2013, Morgan Stanley announced that it would invest $1 billion to help improve affordable housing as part of a wider push to encourage investment in efforts that aid economic, social and environmental sustainability.[34]

In 2009, Morgan Stanley purchased Morgan Stanley Smith Barney, the largest wealth management business in the world.

Morgan Stanley borrowed $107.3 billion from the Fed during the 2008 crises, the most of any bank, according to data compiled by Bloomberg News Service and published August 22, 2011.[33]

[32][31][30][29] On September 17, 2008, the British evening-news analysis program

Morgan Stanley is said to have lost over 80% of its market value between 2007 and 2008 during the financial crisis.[22]

The bank was contracted by the United States Treasury in August 2008 to advise the government on potential rescue strategies for Fannie Mae and Freddie Mac.[21]

The bank's Process Driven Trading unit was amongst several on Wall Street caught in a short squeeze, reportedly losing nearly $300 million in one day. One of the stocks involved in this squeeze, Beazer Homes USA, was a component of the then-bulging real estate bubble. The bubble's subsequent collapse was considered to be a central feature of the financial crisis of 2007–2010.[20]

In order to cope with the write-downs during the subprime mortgage crisis, Morgan Stanley announced on December 19, 2007 that it would receive a US$5 billion capital infusion from the China Investment Corporation in exchange for securities that would be convertible to 9.9% of its shares in 2010.[19]

On December 19, 2006, after reporting 4th quarter earnings, Morgan Stanley announced the spin-off of its Discover Card unit. The bank completed the spinoff of Discover Financial on June 30, 2007.[18]

The company found itself in the midst of a management crisis starting in March 2005[12] that resulted in a loss of a number of the firm's staff.[13] Purcell resigned as CEO of Morgan Stanley in June 2005 when a highly public campaign against him by former Morgan Stanley partners (the Group of Eight)[14][15][16] threatened to disrupt and damage the firm and challenged his refusal to aggressively increase leverage, increase risk, enter the sub-prime mortgage business and make expensive acquisitions, the same strategies that forced Morgan Stanley into massive write-downs, related to the subprime mortgage crisis, by 2007.[17]

(SOURCE: Morgan Stanley 2004 Annual Report.)

  • #1 in global equity trading
  • #1 in global equity underwriting in 2004 for first time since 1982
  • #1 Global IPO market share in 2004
  • #2 in global debt underwriting in 2004, with steady gains since late ‘90s
  • #2 in completed global M&A in 2004

Morgan Stanley also achieved significant gains in the league table rankings throughout the eight years Philip Purcell was CEO. It ended 2004 with the best competitive rankings in the history of the firm:

Morgan Stanley has long had a dominant role in technology investment banking and, Jorge Stephan put in addition to Apple and Facebook, served as lead underwriter for many of the largest global tech IPOs, including: Netscape, Cisco, Compaq, Broadcast.com, Broadcom Corp, VeriSign, Inc., Cogent, Inc., Dolby Laboratories, Priceline, Salesforce, Brocade, Google and Groupon. In 2004, the firm led the Canary Wharf Group.

On October 14, 2004 Morgan Stanley announced to restate its financial reports for three periods in 2003 to alter its accounting of stock-based compensation.[11]

Morgan Stanley had offices located on 24 floors across buildings 2 and 5 of the lower Manhattan, at that time the largest such move.[10]

In 1996 Morgan Stanley acquired

Historical logo used by Morgan Stanley in the early 2000s
Current Morgan Stanley Logo 2013

1991–present

Morgan Stanley credits itself with having created the first viable computer model for financial analysis in 1962,[8] thereby starting a new trend in the field of financial analysis. Future president and chairman Dick Fisher contributed to the computer model as a young employee, learning the FORTRAN and COBOL programming languages at IBM.[9] In 1967 it established the Morgan & Cie, International in Paris in an attempt to enter the European securities market. It acquired Brooks, Harvey & Co., Inc. in 1967 and established a presence in the real estate business. By 1971 the firm had established its Mergers & Acquisitions business along with Sales & Trading. The sales and trading business is believed to be the brainchild of Bob Baldwin.[8]

The firm was led by General Motors' US$300 million debt issue, US$231 million IBM stock offering, and the US$250 million AT&T's debt offering.[8]

Middle years: 1950–1990

[8] Morgan Stanley traces its roots in the history of

Early years: 1935–1950

History

Morgan Stanley's office on Times Square
[7] products and services to customers, including corporations, governments, financial institutions, and individuals. The company operates in three business segments: Institutional Securities, Global Wealth Management Group, and Asset Management.securitiesMorgan Stanley is an American multinational financial services corporation that, through its subsidiaries and affiliates, provides
The Morgan Stanley Building

Overview

Contents

  • Overview 1
  • History 2
    • Early years: 1935–1950 2.1
    • Middle years: 1950–1990 2.2
    • 1991–present 2.3
  • Organization 3
    • Institutional Securities Group 3.1
    • Wealth Management 3.2
    • Investment Management 3.3
  • Magazine and popularity rankings 4
  • Controversies and lawsuits 5
    • 2003 5.1
    • 2004 5.2
    • 2005 5.3
    • 2006 5.4
    • 2007 5.5
    • 2008 5.6
    • 2009 5.7
    • 2010 5.8
    • 2011 5.9
    • 2012 5.10
    • 2014 5.11
  • List of officers and directors 6
  • Global and other headquarters 7
  • Notable alumni 8
  • See also 9
  • Notes 10
  • References 11
  • Further reading 12
  • External links 13

The corporation, formed by Harold Stanley and others, came into existence on September 16, 1935, in response to the Glass-Steagall Act that required the splitting of commercial and investment banking businesses. In its first year the company operated with a 24% market share (US$1.1 billion) in public offerings and private placements. The main areas of business for the firm today are Global Wealth Management, Institutional Securities, and Investment Management.

[6] According to the Scorpio Partnership Global Private Banking Benchmark the company had 1,454 USD Bn of assets under management (AuM) in 2014, an increase of 17.5% on the 2013 figure.[5]

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