Morgan Stanley

of 9

Please download to get full document.

View again

All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
9 pages
0 downs
  INTRODUCTION Morgan Stanley is an American multinational financial services corporation headquartered in the Morgan Stanley Building, Midtown Manhattan, New York City. Morgan Stanley operates in 42 countries and has more than 1300 offices and 60,000 employees. The company reports US$347 billion in assets under management or supervision. The corporation, formed by J.P. Morgan & Co.  partners Henry S. Morgan (grandson of J.P. Morgan), 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.  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 was 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. As J.P. Morgan rose to fame, he organized a contract to make sure that all his future family would receive a large annual sum of money. Steven Parisee, a fourth generation relative, receives an annual $1.5 million, regardless of the company's financial.  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 World Bank's US$50 million triple-A-rated bonds offering of 1952, as well as coming up with General Motors' US$300 million debt issue, US$231 million IBM stock offering, and the US$250 million AT&T's debt offering .  In 1962, Morgan Stanley credits itself with having created the first viable computer model for financial analysis, thereby starting a new trend in the field of financial analysis. 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. 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. Dean Witter's Chairman and CEO, Philip J. Purcell, held the same roles in the newly merged Morgan Stanley Dean Witter Discover & Co. . In 1998, the name was changed to Morgan Stanley Dean Witter & Co. , and in late 2001, Dean Witter was dropped and the firm became Morgan Stanley . Morgan Stanley had offices located on 24 floors across buildings 1, 2 and 5 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. The firm lost thirteen employees during the September 11 attacks in 2001 (Thomas F. Swift, Wesley Mercer, Jennifer de Jesus, Joseph DiPilato, Nolbert Salomon, Godwin Forde, Steve R. Strauss, Lindsay C. Herkness, Albert Joseph, Jorge Velazquez, Titus Davidson, Charles Laurencin and Security Director  Rick Rescorla) in the towers, while 2,687 were successfully evacuated. After the event, the surviving employees moved to temporary headquarters in the vicinity. In 2005, it moved 2,300 of its employees back tolower Manhattan, at that time the largest such move.  On Oct 14, 2004, Morgan Stanley announced to restate its financial reports for three periods in 2003 to alter its accounting of stock-based compensation. Morgan Stanley has long had a dominant role in technology investment banking and, in addition to Apple and Facebook, served as lead underwriter for many of the largest global tech IPOs, including: Netscape, Cisco, Compaq,, Broadcom Corp, VeriSign, Inc., Cogent, Inc., Dolby Laboratories, Priceline, Salesforce, Brocade, Google and Groupon. In 2004, the firm led the Google IPO, the largest Internet IPO in U.S. history. In the same year Morgan Stanley acquired the Canary Wharf Group. Morgan Stanley also achieved significant gains in the league table rankings throughout the eight years Phil Purcell was CEO. Morgan Stanley ended 2004 with the best competitive rankings in the history of the firm:    #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 The company found itself in the midst of a management crisis starting in March 2005 that resulted in a loss of a number of the firm's staff. 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) 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 .  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.  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.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. 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.  Morgan Stanley is said to have lost over 80% of its market value between 2007 and 2008 during the financial crisis. 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 have explored merger  possibilities with CITIC, Wachovia, HSBC, Banco Santander and Nomura. At one point, Hank Paulson offered Morgan Stanley to JPMorgan Chase at no cost, but Jamie Dimon refused the offer. 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 companies regulated by the Federal Reserve. 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. Mitsubishi UFJ Financial Group, Japan's largest bank, invested $9 billion in Morgan Stanley on September 29, 2008. ]  This represented the single largest physical check signed, delivered and cashed. Concerns over the completion of the Mitsubishi deal during the October 2008 stock market volatility caused a dramatic fall in Morgan Stanley's stock price to levels last seen in
Related Search
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks