Morgan Stanley

• 1. Founding And Glass-Steagall Origins

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  The firm formally opened its doors for business on the 16th of September 1935, at 2 Wall Street in New York City. This specific date marked the birth of Morgan Stanley following a legal mandate from Congress. The U.S. Congress had passed the Glass, Steagall Act in 1933 to separate commercial and investment banking businesses under a single holding entity. J.P. Morgan & Co. chose to keep the commercial banking business rather than the investment side. Consequently, some employees left the parent company to form a new entity. Henry S. Morgan, the grandson of J.P. Morgan, and Harold Stanley were among those who departed. They joined partners from Drexel to establish this new organization. In its first year, the company operated with a 24% market share in public offerings and private placements. That figure represented US$1.1 billion in volume. The firm was involved with distributing US$100 million worth of debentures for United States Steel Corporation as the lead underwriter. It also obtained the distinction of being the lead syndicate in the 1939 U.S. rail financing.

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• 2. Mergers And Corporate Evolution

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  On the 5th of February 1997, the company merged with Dean Witter Discover & Co., the spun-off financial services business of Sears Roebuck. Philip J. Purcell, the chairman and CEO of Dean Witter, continued to hold the same roles in the newly merged entity. John J. Mack became the firm's president and chief operating officer. Originally, the name chosen was Morgan Stanley Dean Witter Discover & Co. to avoid tension between the two predecessor firms. Eventually, in 2001, the name changed back to just Morgan Stanley. The merged firm began expanding overseas operations in 1999 when Mack set up a joint venture in India with local partner JM Financial. On the 19th of December 2006, Morgan Stanley announced the spin-off of its Discover Card unit. The bank completed this spinoff on the 30th of June 2007. In October 2020, the company completed its acquisition of E*Trade for $13 billion. This deal marked the biggest acquisition by a U.S. bank since the 2008 financial crisis. In March 2021, Morgan Stanley completed its acquisition of Eaton Vance. With that addition, the firm held $5.4 trillion of client assets across its Wealth Management and Investment Management segments.

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• 3. The 2008 Financial Crisis Response

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  Morgan Stanley borrowed $107.3 billion from the Fed during the 2008 crisis, the most of any bank according to data compiled by Bloomberg News Service. The bank reported losing over 80% of its market value during the financial crisis. By the 19th of September 2008, the share price had slid 57% in four days. CEO John J. Mack wrote in a memo stating they were in the midst of a market controlled by fear and rumors. On the 29th of September 2008, MUFG Bank invested $9 billion in a direct purchase of a 21% ownership stake. Because banks were closed in the US on Columbus Day, MUFG cut a physical check for the full amount. Robert A. Kindler accepted this check at the offices of Wachtell Lipton. Concerns over the completion of the Mitsubishi deal caused a dramatic fall in stock prices to levels last seen in 1994. Morgan Stanley announced on the 19th of December 2007, that it would receive a US$5 billion capital infusion from the China Investment Corporation. This exchange was for securities convertible to 9.9% of its shares in 2010.

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• 4. Regulatory Fines And Legal Controversies

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  In 2003, Morgan Stanley agreed to pay $125 million to settle its portion of a suit brought by Eliot Spitzer regarding misleading research. In 2004, the firm settled a sex discrimination suit with the Equal Employment Opportunity Commission for $54 million. The Securities and Exchange Commission accused the firm of deleting emails and failing to cooperate in May 2006. FINRA announced a $12.5 million settlement on the 27th of September 2007, resolving charges about failure to provide emails to claimants. On the 7th of August 2012, it was announced that Morgan Stanley would pay $4.8 million in fines to settle a price-fixing scandal estimated to have cost New Yorkers $300 million. In February 2014, Morgan Stanley agreed to pay $1.25 billion as a penalty for concealing risk associated with mortgage securities. In September 2022, the SEC announced charges stemming from failures to protect personal identifying information of approximately 15 million customers. Morgan Stanley agreed to pay a $35 million penalty to settle these charges.

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• 5. Business Segments And Revenue Structure

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  Morgan Stanley's Institutional Securities is the most profitable business segment among its three divisions. This segment provides institutions with investment banking services such as capital raising and financial advisory services like mergers and acquisitions. The segment also encompasses Equities and Fixed Income divisions where trading maintains its position as the engine room of the company. Wealth Management provides stockbrokerage and investment advisory services primarily to high-net-worth individuals. Investment Management provides asset management products and services in equity, fixed income, alternative investments, real estate investment, and private equity. In 2023, Wealth Management accounted for 48.5% of revenue share while Institutional Securities made up 42.6%. Investment Management held 9.9% of the total revenue share. On the 13th of January 2009, the Global Wealth Management Group merged with Citi's Smith Barney to form Morgan Stanley Smith Barney. Morgan Stanley owned 51% of that entity initially.

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• 6. Global Operations And Headquarters Network

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  The Morgan Stanley world headquarters are located in New York City at 1585 Broadway in Midtown Manhattan. The European headquarters reside in London while Asia Pacific headquarters operate from both Hong Kong and Tokyo. Canada headquarters are situated in Toronto. Middle East headquarters exist in Abu Dhabi and Dubai with other offices operating in Riyadh and Qatar. The firm has offices in 42 countries and employs more than 80,000 people. Its clients include corporations, governments, institutions, and individuals. Morgan Stanley ranked No. 61 in the 2023 Fortune 500 list of largest United States corporations by total revenue. It also ranked No. 30 in the Forbes Global 2000 in the same year. The firm had offices on 35 floors across buildings 1, 2, and 5 of the World Trade Center before September 11 attacks. Most of these offices were inherited from Dean Witter which occupied the space since the mid-1980s.

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