The group of Morgan Stanley shareholders that wants CEO Philip Purcell gone, is now urging the company to spin off its institutional securities business.
A couple of weeks ago, Morgan Stanley’s board of directors announced that they supported Purcell. This group of 8 shareholders (some of which are former investment bankers for the company) was outraged.
The group feels that Purcell has ruined Morgan Stanley’s reputation. Morgan Stanley’s board did make it so Purcell could be terminated from the company in the future in an effort to please investors. Obviously, this did not satisfy this group of 8. The group recently wrote a letter to the company which MarketWatch explains a little about:
The call comes two days after Purcell and two senior executives publicly defended Morgan Stanley’s current strategy of maintaining a combined institutional investment bank and retail brokerage. See full story.
The institutional group includes the investment bank, equity and debt underwriting, advisory business, fixed income and commodities business and prime brokerage.
Dissenters say a split of the $54 billion company would result in a investment bank valued between $35 billion and $42 billion, and a combined credit-card and retail brokerage unit valued between $28 billion and $32 billion.
“The proposed spin off is motivated by a belief that the board of Morgan Stanley faces an immediate crisis and that the firm has been badly served by its present management and leadership,” said the letter.
If the group of eight gets its way, the following executives formerly of Morgan Stanley would return to the investment bank: John Havens, Terry Meguid, Stephan Newhouse, Vikram Pandit and Joseph Perella. It will be interesting to see how long this group will have to battle with Morgan Stanley’s board.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
