Morgan Stanley
Morgan Stanley[4] is an American multinational investment bank and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in 41 countries and more than 75,000 employees, the firm's clients include corporations, governments, institutions, and individuals.[2] Morgan Stanley ranked No. 61 in the 2023 Fortune 500 list of the largest United States corporations by total revenue[5] and in the same year ranked #30 in Forbes Global 2000.[6]
Company type
1935
- Henry Sturgis Morgan
- Harold Stanley
- William Ewing
- Perry E. Hall
- Edward H. York
- John M. Young
- Dean G. Witter
- Richard S. Reynolds, Jr.
Morgan Stanley Building
New York City, New York, U.S.
International service
- Ted Pick (CEO)
- James P. Gorman (Executive Chairman)
- Andy Saperstein (Co-President)
- Dan Simkowitz (Co-President)
US$54.1 billion (2023)
US$11.8 billion (2023)
US$9.1 billion (2023)
US$1.46 trillion (2023)
US$1.19 trillion (2023)
US$100.0 billion (2023)
80,006 (2023)
15.2% (2023)
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The original Morgan Stanley, formed by J.P. Morgan & Co. partners Henry Sturgis Morgan (a grandson of J.P. Morgan), Harold Stanley, and others, came into existence on September 16, 1935, in response to the Glass–Steagall Act, which required the splitting of American commercial and investment banking businesses.[7] In its first year, the company operated with a 24% market share (US$1.1 billion) in public offerings and private placements.
The current Morgan Stanley is the result of the merger of the original Morgan Stanley with Dean Witter Discover & Co. in 1997.[7] Dean Witter's chairman and CEO, Philip J. Purcell, became the chairman and CEO of the newly merged "Morgan Stanley Dean Witter Discover & Co."[8][9] The new firm changed its name back to "Morgan Stanley" in 2001.[10][11][12] The main areas of business for the firm today are institutional securities, wealth management and investment management. The bank is considered systemically important by the Financial Stability Board.
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Overview[edit]
Morgan Stanley is a financial services corporation that, through its affiliates and subsidiaries, advises, and originates, trades, manages, and distributes capital for institutions, governments, and individuals. The company operates in three business segments: Institutional Securities, Wealth Management, and Investment Management.[2]
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Morgan Stanley is mainly owned by institutional investors, who own around 60% of shares. The largest shareholders in December 2023 were:[85]
Lawsuits[edit]
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2000s[edit]
In 2003, Morgan Stanley agreed to pay $125 million to settle its portion of a $1.4 billion settlement of a suit 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.[93]
In 2004, Morgan Stanley settled a sex discrimination suit brought by the Equal Employment Opportunity Commission for $54 million (~$83.5 million in 2023).[94] In 2007, the firm agreed to pay $46 million (~$65.1 million in 2023) to settle a class action lawsuit brought by eight female brokers.[95]
In July 2004, the firm paid NASD a $2.2 million (~$3.4 million in 2023) fine for more than 1,800 late disclosures of reportable information about its brokers.[96]
In September 2004, the firm paid a $19 million (~$29.4 million in 2023) 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.[97]
The New York Stock Exchange imposed a $19 million (~$28.5 million in 2023) fine on January 12, 2005, for alleged regulatory and supervisory lapses. At the time, it was the largest fine ever imposed by the NYSE.[98]
On May 16, 2005, a Florida jury found that Morgan Stanley failed to give adequate information to Ronald Perelman about Sunbeam thereby defrauding him and causing damages to him of $604 million (~$906 million in 2023). 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.[99] The ruling was overturned on March 21, 2007, and Morgan Stanley was no longer required to pay the $1.57 billion (~$2.22 billion in 2023) verdict.[100]
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.[101]
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.[102]
FINRA announced a $12.5 million (~$17.7 million in 2023) settlement with Morgan Stanley on September 27, 2007. This resolved charges that the firm's former affiliate, Morgan Stanley DW, Inc. (MSDW), failed on numerous occasions to provide emails to claimants in arbitration proceedings as well as to regulators. The company had claimed that the destruction of the firm's email servers in the September 11 attacks in 2001, terrorist attacks on New York's World Trade Center resulted in the loss of all emails before that date. In fact, the firm had millions of earlier emails that had been retrieved from backup copies stored in another location that was not destroyed in the attacks.[103] Customers who had lost their arbitration cases against Morgan Stanley DW Inc. because of their inability to obtain these emails to demonstrate Morgan Stanley's misconduct received a token amount of money as a result of the settlement.
In July 2007, Morgan Stanley agreed to pay $4.4 million (~$6.23 million in 2023) to settle a class-action lawsuit. The firm was accused of incorrectly charging clients for storage of precious metals.[104]
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.[105]
In March 2009, FINRA announced Morgan Stanley was to pay more than $7 million (~$9.66 million in 2023) for misconduct in the handling of the accounts of 90 Rochester, New York-area retirees.[106]
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 (~$167 million in 2023) loss for the firm.[107]
2010s[edit]
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.[108]
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 anti-corruption 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.[109]
Morgan Stanley agreed to pay a $5 million fine to the Commodity Futures Trading Commission and an additional $1.75 million to CME and the Chicago Board of Trade. Morgan Stanley employees improperly executed fictitious sales in Eurodollar and Treasury Note futures contracts.[110]
On August 7, 2012, it was announced that Morgan Stanley would pay $4.8 million in fines to settle a price-fixing scandal, which had been estimated to have cost New Yorkers $300 million to date. Morgan Stanley made no admission of any wrongdoing; however, the Justice Department commented that they hoped this would "send a message to the banking industry".[111]
In Morgan Stanley v. Skowron, 989 F. Supp. 2d 356 (S.D.N.Y. 2013), applying New York's faithless servant doctrine to a case involving Morgan Stanley's hedge fund subsidiary, United States District Judge Shira Scheindlin held that a hedge fund's employee engaging in insider trading in violation of his company's code of conduct, which also required him to report his misconduct, must repay his employer the full $31 million (~$40 million in 2023) his employer paid him as compensation during his period of faithlessness.[112][113][114][115] Judge Scheindlin called the insider trading the "ultimate abuse of a portfolio manager's position".[113] The judge also wrote:"In addition to exposing Morgan Stanley to government investigations and direct financial losses, Skowron's behavior damaged the firm's reputation, a valuable corporate asset."[113]
In February 2014, Morgan Stanley agreed to pay $1.25 billion to the US government, as a penalty for concealing the full risk associated with mortgage securities with the Federal Housing Finance Agency.[116]
In September 2014, Morgan Stanley agreed to pay $95 million (~$120 million in 2023) to resolve a lawsuit 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.[117]
In May 2015, Morgan Stanley was fined $2 million (~$2.51 million in 2023) for short interest reporting and rule violations for more than six years, by FINRA.[118]
February 2016, Morgan Stanley will pay $3.2 billion (~$3.98 billion in 2023) to settle with state and federal authorities over Morgan Stanley's creation of mortgage-backed bonds before the financial crisis.[119]
August 2016, Morgan Stanley Hong Kong Securities Ltd. was fined HK$18.5 million ($2.4 million) by Hong Kong's securities regulator, Securities and Futures Commission, for violations of Hong Kong's Code of Conduct. Included was Morgan Stanley's failure to avoid a conflict of interest between principal and agency trading.[120]
December 2016, another unit of Morgan Stanley paid $7.5 million (~$9.34 million in 2023) to settle customer protection rule violations.[121]
In January 2017, the corporation was fined $13 million (~$15.9 million in 2023) due to overbilling and violating investor asset safeguarding custody rules. Morgan Stanley agreed to pay the fine without commenting on the charges.[121]
Douglas E. Greenberg, a broker, was fired in 2018 after it was reported that four women from Lake Oswego, Oregon, had sought police protection against him over a 15-year period on allegations of harassment, threats, and assault.[122][123][124] According to the report, Morgan Stanley executives were aware of the allegations, and knew of at least two arrests and a federal subpoena against him, but did not take any action.[122][125] The story was called a #MeToo moment for Portland's financial service industry.[123] He managed tens of millions of dollars (~$12 million in 2023), and had made the 2018 Forbes list for top wealth advisors in Oregon.[122][126]
In December 2018, FINRA announced a $10 million (~$12 million in 2023) fine against Morgan Stanley for failures in its anti-money laundering compliance. Morgan Stanley violated the Bank Secrecy Act over a period of five years.[127]
In April 2019, Morgan Stanley agreed to pay $150 million (~$176 million in 2023) to settle charges that it had misled two large California public pension funds about the risks of mortgage-backed securities.[128] California Attorney General Xavier Becerra commented: "Morgan Stanley lied about the risk of its products and put profits over teachers and public employees who relied on its advice." Morgan Stanley denied wrongdoing.[129]
In November 2019, Morgan Stanley fired or placed on leave four traders for suspected securities mismarking. The firm suspected that $100–140 million in losses were concealed by the mismarking of the value of the securities.[130]
Morgan Stanley paid a $1.5 million fine to settle SEC claims that it put client money into more expensive mutual fund share classes when cheaper options were available despite representations to clients that it used tools to find the least costly option.[131]
2020s[edit]
In May 2020, Morgan Stanley agreed to pay a $5 million penalty to settle allegations made by the SEC that the corporation provided misleading information to some clients in the retail wrap fee programs regarding trade-execution services and transaction costs.[132]
In September 2022, the SEC announced charges against Morgan Stanley stemming from the firm’s extensive failures, over a five-year period, to protect the personal identifying information of approximately 15 million customers. Morgan Stanley agreed to pay a $35 million penalty to settle the SEC charges.[133]
In November 2023, Attorney General of Connecticut William Tong announced a $6.5 million settlement with Morgan Stanley for compromising the personal information of its customers due to negligent security practices.[134]
In January 2024, Morgan Stanley agreed to pay $249 million to settle a criminal investigation and a related Security and Exchange Commission probe related to the unauthorized disclosure of block trades to investors, by the bank's supervisor for such trades and another employee.[135]
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