Morgan Stanley

• 1. Introduction

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  Morgan Stanley opened for business on the 16th of September 1935, at 2 Wall Street, New York City. One of its founders was Henry Sturgis Morgan, a grandson of J.P. Morgan himself. He had walked away from his grandfather's firm to help build something new. In its first year, the company captured a 24% share of the American market for public offerings and private placements. That figure totaled $1.1 billion. A congressional law had forced the separation that made Morgan Stanley possible. Today the firm has offices in 42 countries and more than 80,000 employees. What drove a founding family to leave one dynasty and help build another? And how would a firm born from legislation navigate the most dangerous financial crisis in modern history?

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• 2. The Glass-Steagall Split

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  Congress passed the Glass-Steagall Act in 1933, drawing a sharp line through American finance. The law forbade any holding company from operating both commercial and investment banking businesses. J.P. Morgan & Co. faced that choice and elected to stay on the commercial side. Harold Stanley, along with partners from the Drexel firm, joined others to form a new investment bank on the other side of that divide. In 1938, the new firm distributed US$100 million in debentures for the United States Steel Corporation as lead underwriter. The following year, it led the syndicate for a significant US rail financing. A reorganization in 1941 expanded its capacity in the securities business. The Glass-Steagall framework that gave Morgan Stanley life would govern American banking for decades. Long before that era ended, the new firm had made itself indispensable to the largest corporate borrowers in the country.

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• 3. Building a Wall Street Name

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  Perry Hall, the last founding member to lead Morgan Stanley, took charge of the firm in 1951. He guided it through the next decade, a period marked by some of the largest financial transactions in the American economy. In 1952, Morgan Stanley co-managed the World Bank's triple-A-rated bonds offering. That was followed by a US$300 million debt issue for General Motors and a US$231 million stock offering for IBM. AT&T added a US$250 million debt offering to the list.

  In 1962, the firm staked a claim no other bank had yet made. Morgan Stanley says it created the first viable computer model for financial analysis that year, launching a new practice across the industry. Dick Fisher, a future president and chairman of the firm, built that model as a young employee. He learned the Fortran and COBOL programming languages at IBM for that purpose.

  By 1967, the firm was moving beyond the domestic market. Morgan Stanley established Morgan & Cie, International in Paris, seeking a position in the European securities business. The same year, it acquired Brooks, Harvey & Co., Inc. and entered the real estate sector. The firm's sales and trading operations grew significantly through this era, widely credited to Bob Baldwin. In 1996, the firm acquired Van Kampen American Capital, adding to its asset management capacity. The following year would bring the largest transformation in the firm's history to that point.

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• 4. Dean Witter and September 11

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  On the 5th of February 1997, Morgan Stanley merged with Dean Witter Discover & Co., the former financial services arm of Sears Roebuck. Philip J. Purcell, who had been Dean Witter's chairman and CEO, carried those titles into the combined firm. John J. Mack, Morgan Stanley's president, became the merged entity's president and chief operating officer. The new company took on the name Morgan Stanley Dean Witter Discover & Co. That was shortened to Morgan Stanley Dean Witter & Co. in 1998, then reduced to simply Morgan Stanley in 2001.

  Dean Witter had occupied floors in Buildings 1, 2, and 5 of the World Trade Center since the mid-1980s. When the two companies combined, Morgan Stanley inherited that space and became the largest corporate tenant in the complex. Security Director Rick Rescorla organized the evacuation of 2,687 employees from the towers on the 11th of September 2001. He died in the effort. His twelve colleagues who also perished were Thomas F. Swift, Wesley Mercer, Jennifer de Jesus, and Joseph DiPilato. Nolbert Salomon, Godwin Forde, Steve R. Strauss, and Lindsay C. Herkness were also among those lost. Albert Joseph, Jorge Velazquez, Titus Davidson, and Charles Laurencin died as well. The surviving employees relocated to temporary headquarters in the area.

  In 2003, New York-Presbyterian Hospital named its children's facility the Morgan Stanley Children's Hospital, recognizing the firm's role in funding its construction. Employees had donated personally toward the building since the 1990s, and the facility opened in November 2003. In March 2005, a management crisis erupted that cost the firm significant leadership. Philip J. Purcell resigned as CEO in June 2005 after former partners launched a public campaign against him. His critics had demanded more leverage, more risk-taking, and entry into subprime lending. By 2007, those same strategies had produced massive write-downs at Morgan Stanley. In 2005, the firm moved 2,300 employees back to lower Manhattan, one of the largest such corporate relocations the city had seen. By the 19th of December 2006, the firm had announced the spin-off of its Discover Card unit. The transaction was completed on the 30th of June 2007.

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• 5. Forty-Two Percent in Two Days

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  On the 17th of September 2008, the British news program Newsnight reported that Morgan Stanley's share price had fallen 42% in just two days. CEO John J. Mack sent a memo to his staff. He wrote: "we're in the midst of a market controlled by fear and rumours and short-sellers are driving our stock down." By the 19th of September 2008, the share price had dropped 57% in four days. The firm explored merger possibilities with CITIC, Wachovia, HSBC, Standard Chartered, Banco Santander, and Nomura. Treasury Secretary Hank Paulson offered to transfer Morgan Stanley to JPMorgan Chase at no cost. Jamie Dimon, JPMorgan's CEO, declined.

  On the 22nd of September 2008, Morgan Stanley and Goldman Sachs announced they would convert to bank holding companies, regulated by the Federal Reserve. The move ended 75 years of the independent investment bank model in the United States. During the same weeks, the firm lost more than 80% of its market value.

  MUFG Bank agreed to invest $9 billion for a 21% stake in Morgan Stanley. The deal was scheduled to close on the 29th of September 2008. Because the payment fell on Columbus Day, when American banks were closed, MUFG issued a physical check for the full $9 billion. At the time, it was the largest amount ever paid by a single physical check. Robert A. Kindler, Morgan Stanley's Global Head of Mergers and Acquisitions, accepted the check at the offices of Wachtell Lipton. The stake was formally completed on the 14th of October 2008, and the firm's share price recovered.

  Earlier, on the 19th of December 2007, Morgan Stanley had received a US$5 billion capital infusion from the China Investment Corporation. In exchange, the CIC received securities convertible to 9.9% of Morgan Stanley's shares in 2010. In August 2008, the United States Treasury hired Morgan Stanley to advise on potential rescue strategies for Fannie Mae and Freddie Mac. Within days, the firm itself was at risk of failure. The Bloomberg figure, published on the 22nd of August 2011, put the firm's total Federal Reserve borrowing at $107.3 billion. No other bank had drawn as much from the Federal Reserve during the crisis.

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• 6. Legal Disputes and Settlements

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  In 2003, Morgan Stanley agreed to pay $125 million as its share of a $1.4 billion settlement. New York Attorney General Eliot Spitzer had brought the case, accusing major investment banks of issuing misleading research to win investment banking business. The following year, the firm paid $54 million to settle a sex discrimination case filed by the Equal Employment Opportunity Commission. In 2007, it paid an additional $46 million to settle a class-action lawsuit brought by eight female brokers.

  On the 16th of May 2005, a Florida jury found that Morgan Stanley had defrauded Ronald Perelman in a transaction involving Sunbeam. The jury awarded $604 million in compensatory damages. Punitive damages brought the total verdict to $1.45 billion. A judge directed that verdict as a sanction: the firm's attorneys had withheld documents and falsely told the court those documents did not exist. Morgan Stanley appealed, and on the 21st of March 2007, the ruling was overturned.

  FINRA announced a $12.5 million settlement with Morgan Stanley on the 27th of September 2007, over the concealment of emails from arbitration claimants and regulators. The firm had claimed that the September 11 attacks destroyed the relevant emails, which had been stored on servers at the World Trade Center. In fact, the firm possessed millions of earlier emails in backup copies stored at a location that had not been affected by the attacks. Customers who had lost arbitration cases partly because of that concealment received token payments under the settlement.

  In February 2016, Morgan Stanley agreed to pay $3.2 billion to state and federal authorities. The settlement concerned mortgage-backed bonds the firm had issued before the 2008 financial crisis. In September 2022, the SEC charged Morgan Stanley with failing to protect the personal identifying information of approximately 15 million customers. Those failures had accumulated over a five-year period. Morgan Stanley agreed to pay a $35 million penalty.

  In January 2024, Morgan Stanley agreed to pay $249 million to settle a criminal investigation and a related SEC probe. The case concerned the unauthorized disclosure of block trade information to investors by a bank supervisor and another employee. In 2025, Dutch authorities imposed fines totaling 101 million euros on two Morgan Stanley companies in London and Amsterdam for dividend withholding tax evasion.

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• 7. A Wealth Management Empire

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  In 2009, Morgan Stanley purchased Smith Barney from Citigroup, creating what it called the largest wealth management business in the world. The firm initially owned 51% of the combined broker-dealer, with Citigroup holding 49%. On the 31st of May 2012, Morgan Stanley exercised an option to buy an additional 14% from Citigroup. By June 2013, it had secured regulatory approval to acquire Citigroup's remaining 35%, completing its full ownership of Smith Barney. In 2009, Morgan Stanley also sold Van Kampen to Invesco for $1.5 billion, retaining the Morgan Stanley brand for its own asset management business.

  In February 2020, Morgan Stanley announced a $13 billion deal to acquire E*Trade. The deal closed in October 2020 and was the largest acquisition by a US bank since the 2008 financial crisis. That same month, Morgan Stanley announced a deal to acquire Eaton Vance, completing the purchase in March 2021. With Eaton Vance added to its books, the firm held $5.4 trillion in client assets across its Wealth Management and Investment Management segments.

  As of 2023, Morgan Stanley ranked 61st on the Fortune 500 list of the largest US corporations by revenue. That same year it placed 30th on the Forbes Global 2000. In October 2025, the firm agreed to acquire EquityZen, a platform for buying and selling stakes in private companies not yet listed on public exchanges.

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