Morgan Stanley
Morgan Stanley () is an investment bank, retail broker, and credit card provider headquartered in New York City.
Overview
Morgan Stanley is a global financial services firm that, through its subsidiaries and affiliates, provides its products and services to customers, including corporations, governments, financial institutions and individuals. The Company operates in four business segments: Institutional Securities, Global Wealth Management Group, Asset Management and Discover.[1]
- Institutional Securities includes capital raising; financial advisory services, including advice on mergers and acquisitions, restructurings, real estate and project finance; corporate lending; sales, trading, financing and market-making activities in equity securities and related products and fixed income securities and related products, including foreign exchange and commodities; benchmark indices and risk management analytics; research; and investment activities.
- Global Wealth Management Group provides brokerage and investment advisory services; financial and wealth planning services; annuity and insurance products; credit and other lending products; banking and cash management services; retirement services, and trust and fiduciary services. Global Wealth Management Group serves individual investors and small-to-medium size businesses and institutions with an emphasis on high-net-worth investors. It provides clients with an array of financial solutions comprising Morgan Stanley's products and services, as well as products and services from third-party providers, such as insurance companies and mutual fund families. The Company offers brokerage and investment advisory services covering various investment alternatives, including equities, options, fixed income securities, mutual funds, structured products, alternative investments, unit investment trusts, managed futures, separately managed accounts and mutual fund asset allocation programs. Its financial and wealth planning services offered include education savings programs, as well as annuity and insurance products, including life, disability and long-term care insurance.
- Asset Management provides global asset management products and services in equity, fixed income, alternative investments and private equity to institutional and retail clients through third-party retail distribution channels, intermediaries and Morgan Stanley's institutional distribution channel. Morgan Stanley's asset management activities are principally conducted under the Morgan Stanley and Van Kampen brands. 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. Products and services are available to institutional investors primarily through separate accounts, United States mutual funds and other pooled vehicles. Morgan Stanley Investment Management also sub-advises funds for various unaffiliated financial institutions and intermediaries. Morgan Stanley offers open-end funds and separately managed accounts to individual investors through affiliated and unaffiliated broker dealers, banks, insurance companies and financial planners. Closed-end funds managed by Morgan Stanley or Van Kampen are available to individual investors through affiliated and unaffiliated broker dealers.
- Discover offers Discover®-branded credit cards and other consumer products and services, and includes the operations of Discover Network, which operates a merchant and cash access network for Discover Network-branded cards, and PULSE EFT Association LP, an automated teller machine/debit and electronic funds transfer network. The Discover business segment also includes consumer finance products and services in the U.K., including Morgan Stanley-branded, Goldfish-branded and various other credit cards issued on the MasterCard and Visa networks.
Morgan Stanley is a global financial services firm, offering a wide variety of products and services. A partial list of these products and services includes:
Despite offering such a diverse array of services, Morgan Stanley is an industry leader in many areas, particularly equity and debt underwriting and investment banking. The company considers its brand name and reputation as a longtime leading financial firm among its most valuable assets.
(See 2005 Annual Report).
History: mergers, acquisitions, and divestitures
Morgan Stanley was founded in New York on September 5, 1935, by Henry S. Morgan, and Harold Stanley of J. P. Morgan & Co. along with others from Drexel & Co. This split of the commercial and investment banks came as a result of the Glass-Steagall Act. Within its first year it achieved 24% of market share among public offerings. In 1964 Morgan Stanley created the first viable computer model for financial analysis. By 1971 the Mergers & Acquisitions business was established along with Sales & Trading. In 1986 Morgan Stanley Group, Inc. became publicly listed.
In 1996, Morgan Stanley acquired Van Kampen American Capital (website), a respected mutual fund company.
On February 5, 1997, the company merged with Dean Witter, and Discover & Co. (a.k.a. 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 when it was known as "Morgan Stanley Dean Witter & Co." until late 2001. To foster brand recognition and marketing the Dean Witter name was dropped and the firm became "Morgan Stanley".
On December 19th 2006, after reporting 4th quarter earnings, Morgan Stanley announced the spin off of its Discover Card unit.
Organization
Morgan Stanley comprises four main business units:
- Institutional Securities
- Global Wealth Management Group
- Investment Management
- Credit Services
Diversity and culture
- 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
- Morgan Stanley is listed in The Times Top 100 Graduate Employers, only recently dropping out of the top 40
- The Times listed Morgan Stanley 5th in its 20 Best Big Companies to Work For 2006 list[2]
- 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[3]
- Morgan Stanley has a strong commitment to equal rights for gay, bisexual and transgendered people - recently demonstrated by sponsoring the Mayor's Reception at London's EuroPride 2006 Festival
- Like most other corporations of its size, has been sued on numerous occasions by former women employees
Legal proceedings
Misleading financial analysis was disclosed amongst investment banks in the United Kingdom, but the FSA Financial Services Authority, decided not to intervene. 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 punitive damages of $1.450 billion. Morgan Stanley has stated the decision will be appealed and is confident the decision will be overturned.
On March 21, 2007, the ruling was overturned and Morgan Stanley was no longer required to pay the 1.57 billion dollar settlement[4].
Morgan Stanley asserts many rulings in the trial were "unprecedented and highly prejudicial rulings imposed by the judge" [5]. It should be noted that Morgan Stanley lost an estimated $300 million on the Sunbeam collapse, calling into serious question any alleged motive on the firm's part. From a business ethics perspective, it is also questionable whether Morgan Stanley, in its analyst capacity, was responsible for or even capable of ensuring the accuracy of Sunbeam financial data, which is generally considered the responsibility of internal and external accounting faculties.
More recently, a class action lawsuit was filed in California by both current and former Morgan Stanley employees for unfair labor practices that were instituted to those employed through the financial advisor training program. A $40 million settlement was reportedly reached, with expected payout to those employed through the training program between specified dates.
Morgan Stanley is most recently in a case with former employee Louis Rosenwein. Following the collapse of Andrx Corp. Rosenwein sued the company for not allowing him to hedge the stock. The case is taking place in New York City and began in April 2005.
Recent disputes (2005)
Concerned over lackluster performance, eight former senior Morgan Stanley executives sent a letter to the Board on March 3, 2005 requesting immediate replacement of Purcell as CEO. On March 29, Purcell announced that he would be replacing President Stephan Newhouse, a 26 year Morgan Stanley veteran and former Navy officer, with Zoe Cruz and Steve Crawford, two of Purcell's most recognized supporters. Three days later, the so called “Group of Eight” published a full-page advertisement in the Wall Street Journal and launched a website publicizing their position.
On May 12, 2005, dissidents announced a plan to split 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 had not worked over the past eight years. (See New York Times article, May 13, 2005.)
On June 13, 2005 Purcell announced that he would retire as CEO when a successor was found, but no later than March 2006. Former President John Mack was chosen to succeed Purcell and his appointment was made official by the board of directors on June 30, 2005. Mack announced he would forgo the $25 million per year guaranteed him in his rehiring, preferring instead to be paid based on performance. Purcell's exit package was in excess of $113 million.
Morgan Stanley has been embroiled in a recent series of high-level defections, including Joe Perella, Tarek Meguid, Vikram Pandit, and John Havens. Perella and Meguid have established a boutique mergers and acquisitions advisory firm in New York while Havens has established a hedge fund with Pandit.
Notable current and former employees
Business
Politics and public service
Other
Trivia
- Former Chairman and CEO: Philip J. Purcell, who headed Dean Witter Discover, was Chairman and CEO since the merger until June 30, 2005. He announced his retirement on June 13, 2005 (see "Recent disputes (2005)"), and John J. Mack was ultimately named his successor.
- Morgan Stanley is an industry leader in underwriting Initial public offerings of stock worldwide.
- Morgan Stanley reported net revenues of $52.498 billion in 2005.
- Morgan Stanley ranks as the 30th largest U.S. corporation in 2005, when ranked by revenue.
- In 2004, Morgan Stanley held the #1 industry rank for the following categories: Global Equity and Equity-Related Underwriting Market Share, Global IPO Market Share, and Global Equity Trading Market Share.
- Morgan Stanley had 53,760 total employees worldwide as of August 31, 2005.
- Morgan Stanley is considered the industry leader in information technology, with an IT budget rivaling the operating budget of many medium and large software companies. Its IT department has also received accolades from the open source community for its continual work in commercial proliferation and improvement of OSS, including such projects as the A+ programming language, the Perl interface to IBM's MQ messaging product and a computing architecture which led to the Stateless Linux project for Fedora Core.
- Morgan Stanley and Credit Suisse were principal underwriters of the $1.9 billion auction of Google IPO in 2004. The deal was the largest Internet IPO to that date.[6]
- As of June 2005, the firm's market capitalization was around $58.5 billion.
- Morgan Stanley was the largest employer in the World Trade Center prior to the events of September 11, 2001. In June 2005, the company announced it would return 2,300 workers to lower Manhattan, marking the largest return of jobs since the attacks.
- Morgan Stanley advises on many of China’s largest IPOs, including China Unicom’s US$5.6 billion listing, Sinopec’s US$3.4 billion triple listing and China Construction Bank’s US$9.2 billion IPO. In addition, Morgan Stanley acquired Nan Tung Bank in China in 2006.
- Morgan Stanley Japan Securities ranked Number 2 in "Great Place to Work® Institute Japan"[7]
See also
In House
Competitors
External links
Morgan Stanley Sites
Morgan Stanley RSS Feeds
Morgan Stanley Info
References
- Hibbard, J. (17 January 2005). Morgan Stanley: No stars—and lots of top tech IPOs. In BusinessWeek, 56 – 58.
- Chernow, Ron (Copyright 1990) The House Of Morgan
- Partnoy, Frank ((c)1997) Penguin Books, NY - F.I.A.S.C.O
Citations