Morgan Stanley
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| Type | Public (NYSE: MS) |
|---|---|
| Industry | Financial services |
| Founded | 1935 |
| Headquarters | New York City, New York, United States |
| Area served | Worldwide |
| Key people | John J. Mack (Chairman) James P. Gorman (President & CEO) |
| Products | Financial services Investment Banking Commercial Banking Commodities Investment Management Retail Brokerage |
| Revenue |  US$ 30.070 billion (2009) |
| Operating income |  US$ 29.213 billion (2009) |
| Net income | US$ 1.346 billion (2009) |
| Total assets | US$ 809 billion (2Q 2010) |
| Total equity | US$ 51 billion (2Q 2010) |
| Employees | 62,926 (2010) |
| Website | MorganStanley.com |
Morgan Stanley is a global financial services firm headquartered in New York City, New York, United States serving a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley also operates in 36 countries around the world, with over 600 offices and a workforce of over 60,000.[1] The company reports US$779 billion as assets under its management.[2] It is headquartered in Midtown Manhattan, New York City.[3]
The corporation, formed by J.P. Morgan & Co. employees Henry S. Morgan (grandson of J.P. Morgan), Harold Stanley and others, came into existence on September 16, 1935. 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.
The company found itself in the midst of a management crisis in the late 1990s[4] that resulted in a loss of a number of the firm's top talent.[5] and ultimately saw the firing of its then CEO Philip Purcell in 2005.
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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 three business segments: Institutional Securities, Global Wealth Management Group, and Asset Management.[6]
History
Early years: 1935–1950
Morgan Stanley can trace its roots in the history of J.P. Morgan & Co. Following the Glass-Steagall Act, it became no longer possible for a corporation to have investment banking and commercial banking businesses under a single holding entity. J.P. Morgan & Co. chose the commercial banking business over the investment banking business. As a result, some of the employees of J.P. Morgan & Co., most notably Henry S. Morgan and Harold Stanley, left J.P. Morgan & Co. and joined some others from the Drexel partners to form Morgan Stanley. The firm formally opened the doors for business on September 16, 1935, at Floor 19, 2 Wall Street, New York City. Within its first year, it achieved 24% market share (US$1.1 billion) among public offerings. The firm was involved with the distribution of 1938 US$100 million of debentures for the United States Steel Corporation as the lead underwriter. The firm also obtained the distinction of being the lead syndicate in the 1939 U.S. rail financing. The firm went through a major reorganization in 1941 to allow for more activity in its securities business.[7]
Middle years: 1950–1990
The firm was led by Perry Hall, the last founder to lead Morgan Stanley, from 1951–1961. During this period the firm co-managed the famous World Bank's US$50 million triple-A-rated bonds offering of 1952. The firm, in this period, also came up with the General Motor's US$300 million debt issue, US$231 million IBM stock offering, the US$250 million AT&T's debt offering[7].
In 1962, Morgan Stanley credits itself with having created the first viable computer model for financial analysis[7], thereby starting a new trend in the field of financial analysis. In 1967 it established the Morgan & Cie, International in Paris in 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[7]. In 1970 Morgan Stanley opened a representative office in Tokyo and formally entered the Japanese markets. In 1975 Morgan Stanley established Morgan Stanley International Inc. in London. The private wealth management department was added into the firm's business units by 1977 when Morgan Stanley established Morgan Stanley Realty Inc. In the same year Morgan Stanley merged with Shuman, Agnew & Co. Morgan Stanley lead the Apple common stock IPO on December 12, 1980. The firm entered the Prime Brokerage business in 1984. In 1986, Morgan Stanley Group, Inc., was publicly listed on the New York Stock Exchange. By 1990 Morgan Stanley had its regional offices in Frankfurt, Hong Kong, Luxembourg, Melbourne, Milan, Sydney and Zürich and had regional headquarters in London and Tokyo.
Recent years: 1991–present
In 1996, Morgan Stanley acquired Van Kampen American Capital. On February 5, 1997, the company merged with Dean Witter Reynolds, and Discover & Co. 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". Morgan Stanley acquired AB Asesores of Spain and entered India in a joint venture with JM Financials in 1999.
In 2001, Morgan Stanley had offices located on fifteen floors, running from the 59th floor to the 74th floor, of the South Tower of the World Trade Center in New York City. These offices had been inherited from Dean Witter which had occupied the space since the mid-1980s. During the events of September 11, both WTC towers collapsed after al-Qaeda terrorists hijacked two airplanes and flew them into the towers. Ten employees died; one on American Airlines Flight 11, and nine others in the towers, including Security Director Rick Rescorla. 2,687 were successfully evacuated. After the disaster, the surviving employees moved to temporary headquarters in the vicinity. In 2005, it moved 2,300 of its employees back to lower Manhattan, at that time the largest such move.[8]
In 2004, Morgan Stanley lead the Google IPO which is the largest internet IPO in U.S. history. In the same year Morgan Stanley acquired the Canary Wharf Group. On December 19, 2006, after reporting 4th quarter earnings, Morgan Stanley announced the spin-off of its Discover Card unit. In order to cope up 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.[9] The bank completed the spinoff of Discover Financial was on June 30, 2007.[10]
In early August, 2007, the Process Driven Trading unit was amongst several on Wall Street caught in a short squeeze, reportedly losing nearly $300 million on Wednesday, August 8 alone while liquidating positions. One of the stocks involved in this August squeeze, Beazer Homes USA, was a component of the then-bulging real estate bubble; the bubble in turn would be considered by many, in its collapse, to be a central feature of the financial crisis of 2007–2010.[11]
In August 2008, Morgan Stanley was contracted by the United States Treasury to advise the government on potential rescue strategies for Fannie Mae and Freddie Mac [12].
On September 17, 2008, the British evening-news analysis program Newsnight reported that Morgan Stanley was facing difficulties after a 42% slide in its share price. CEO John J. Mack wrote in a memo to staff "we're in the midst of a market controlled by fear and rumours and short-sellers are driving our stock down." The company was said to explore merger possibilities with CITIC, Wachovia, HSBC, Banco Santander and Nomura.[13] At one point, Hank Paulson offered Morgan Stanley to JPMorgan Chase at no cost, but Jamie Dimon refused the offer.[14]
On September 22, 2008, the last two major unregulated investment banks in the US, Morgan Stanley and Goldman Sachs, both announced that they would become traditional bank holding companies regulated by the Federal Reserve, bringing an end to the era of investment banking on Wall Street.[15] The Federal Reserve's approval of their bid to become banks ends the ascendancy of the securities firms, 75 years after Congress separated them from deposit-taking lenders, and caps 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. [16]
On September 29, 2008, it was announced that Mitsubishi UFJ Financial Group, Japan's largest bank, will take a stake of $9 billion in Morgan Stanley equity.[17] In the midst of the October 2008 stock market volatility, concerns over the completion of the Mitsubishi deal caused a dramatic fall in Morgan Stanley's stock price to levels last seen in 1994. The stock grew considerably after Mitsubishi UFJ closed the deal to buy 21% of Morgan Stanley on October 14, 2008.
In 2009, Morgan Stanley purchased Smith Barney from Citigroup and the new company is operating under the name Morgan Stanley Smith Barney.
In April 2010 the Wall Street Journal reported that as part of the two firms' technological integration Morgan Stanley Smith Barney will roll out a new web-based broker workstation called 3D.[18]
Organization
Morgan Stanley splits its businesses into three core business units. These follow below.
Institutional Securities
Institutional Securities has been the most profitable business segment[19] for Morgan Stanley in recent times. This business segment provides institutions with services such as capital raising and financial advisory services including mergers and acquisitions advisory, restructurings, real estate and project finance, and corporate lending. The segment also encompasses the Equities and the Fixed Income divisions of the firm; trading is anticipated to maintain its position as the "engine room" of the company.[20]
Global Wealth Management Group
Global Wealth Management Group provides brokerage and investment advisory services. As of 2008 Q1 this segment has reported an annual increase of 12 percent in the pre-tax income[19]. This segment provides financial and wealth planning services to its clients who are primarily high net worth individuals.
Asset Management
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.
Magazine and Popularity Rankings
- 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[21]
- 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[22]
Controversies and lawsuits
In 2003, Morgan Stanley agreed to pay billions of dollars in order to settle its portion of various legal actions and investigations brought by Eliott Spitzer, the Attorney General of New York, the National Association of Securities Dealers (Now FINRA), the United States Securities and Exchange Commission, (SEC) and a number of state securities regulators, relating to fraud that was allegedly perpetrated upon retail investors by a dozen of the largest investment banking securities brokerage firms.
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. In addition, punitive damages were added for total damages of $1.450 billion. This verdict was directed by the judge as a sanction against Morgan Stanley after the firm's attorneys infuriated the court by failing and refusing to produce documents, and falsely telling the court that certain documents did not exist. On March 21, 2007, the ruling was overturned and Morgan Stanley was no longer required to pay the $1.57 billion verdict.[23].
On March 2, 2006, Morgan Stanley settled a class action lawsuit 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, though Morgan Stanley admits no fault in the settlement.[24]
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.[25]
FINRA fine for e-mails
On September 27, 2007, FINRA announced a $12.5 million settlement with Morgan Stanley to resolve charges that the firm's former affiliate, Morgan Stanley DW, Inc. (MSDW), failed on numerous occasions to provide e-mails to claimants in arbitration proceedings as well as to regulators - while representing that the destruction of the firm's email servers in the September 11, 2001 terrorist attacks on New York's World Trade Center resulted in the loss of all pre-9/11 e-mail. In fact, the firm had millions of pre-9/11 e-mails that had been restored to the firm's active e-mail system using back-up tapes that had been stored in another location.[26] Customers who had lost their arbitration cases against Morgan Stanley DW Inc. because of their inability to obtain the emails to demonstrate Morgan Stanley's misconduct will each receive a token amount of money as a result of the settlement.
List of officers and directors
James P. Gorman (CEO)
Ruth Porat (CFO)
Global Headquarters
Morgan Stanley World Headquarters located in New York, European headquarters are based in London and Asia Pacific Headquarters are based in Hong Kong [27][28]
See also
- Dean Witter Reynolds
- Discover Card
- Morgan Stanley Capital International (MSCI)
- Van Kampen Funds
- Metalmark Capital, formerly Morgan Stanley Capital Partners
- Morgan Stanley Smith Barney, a joint venture with Citigroup
References
- ↑ "Morgan Stanley article in The Gateway". The Gateway Online. http://www.thegatewayonline.com/article/317. Retrieved 2009-11-25.
- ↑ "Company Information". Morgan Stanley Website. http://www.morganstanley.com/about/company/index.html. Retrieved 2008-03-22.
- ↑ "Contact Us." Morgan Stanley. Retrieved on August 28, 2009.
- ↑ "Lame Duck Purcell". Forbes Website. http://www.forbes.com/2005/06/13/morgan-stanley-purcell-quit-cx_lm_0613quit.html?boxes=custom. Retrieved 2008-03-22.
- ↑ THOMAS Jr, LANDON (April 21, 2005). "Morgan Stanley Exodus Continues as 8 Traders Leave". New York Times Online Edition of April 21, 2005. http://www.nytimes.com/2005/04/21/business/21wall.html. Retrieved 2008-03-22.
- ↑ "Google Finance - Morgan Stanley Summary". Google Finance. http://finance.google.com/finance?q=ms. Retrieved 2007-12-19.
- ↑ 7.0 7.1 7.2 7.3 "Company History". Morgan Stanley Website. http://www.morganstanley.com/about/company/history.html. Retrieved 2008-03-22.
- ↑ "Surviving 9/11 gave former NHLer Rob Cimetta a new outlook on life". http://www.lowermanhattan.info/news/morgan_stanley_to_move_52052.aspx. Retrieved 2009-09-11.
- ↑ "Morgan Stanley posts loss on writedown". Joe Bel Bruno, AP Business Writer. http://biz.yahoo.com/ap/071219/earns_morgan_stanley.html. Retrieved 2007-12-19.
- ↑ http://www.morganstanley.com/about/press/articles/4984.html
- ↑ 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 0307453375 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.
- ↑ "Morgan Stanley to Advise U.S. on Fannie and Freddie". Louise Story, The New York Times. August 6, 2008. http://www.nytimes.com/2008/08/06/business/06morgan.html?ref=business. Retrieved 2008-08-11.
- ↑ Morgan Stanley perplexes Wall Street as bank loses $20bn, The Times, September 19, 2008
- ↑ [Duff McDonald, Last Man Standing (2009)]
- ↑ Wall Street in crisis: Last banks standing give up investment bank status, The Guardian, September 22, 2008
- ↑ Goldman, Morgan Stanley Bring Down Curtain on an Era, bloomberg, September 22, 2008
- ↑ "Mitsubishi UFJ Financial Group to Invest $9 Billion in Morgan Stanley". http://www.morganstanley.com/about/press/articles/6962.html. Retrieved 2008-10-02.
- ↑ . http://online.wsj.com/article/BT-CO-20100419-711382.html?mod=WSJ_latestheadlines.
- ↑ 19.0 19.1 "Morgan Stanley Reports First Quarter Results". Morgan Stanley Press Release. http://www.morganstanley.com/about/ir/shareholder/1q2008.html. Retrieved 2008-03-22.
- ↑ FINS.com. "Morgan Stanley Overview". http://www.fins.com/Finance/Companies/141/Morgan-Stanley. Retrieved 2010-07-19.
- ↑ "Times 20 Best Big Companies to Work For 2006 list". London: Times Online. 2004-08-23. http://business.timesonline.co.uk/section/0,,20089,00.html. Retrieved 2007-02-08.
- ↑ Great Place to Work Institute
- ↑ Morgan Stanley has billionaire Perelman's $1.58 billion award reversed in Sunbeam lawsuit - International Herald Tribune
- ↑ Morgan Settles Suit on Overtime - Los Angeles Times
- ↑ Citigroup Sues Morgan Stanley Over $250 Million CDO - Bloomberg
- ↑ FINRA News Release
- ↑ http://www.morganstanley.com/about/offices/uk.html
- ↑ http://www.morganstanley.com/about/offices/hk.html
- Chernow, Ron (Copyright 1990) The House of Morgan
- Hibbard, J. (17 January 2005). Morgan Stanley: No stars—and lots of top tech IPOs. In BusinessWeek, 56 – 58.
- John Mack Elected Chairman and CEO of Morgan Stanley
- Partnoy, Frank. F.I.A.S.C.O. - NY: Penguin Books, 1997.
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