Company Overview

Morgan Stanley was formed in 1935, when the Glass-Steagall Act forced banks to cease underwriting and other investment banking activities and Henry Morgan and Harold Stanley left J.P. Morgan and established a separate I-banking firm. The 1997 merger with Dean Witter gave Morgan Stanley access to that company's extensive retail brokerage business, helping the firm better compete with brokerage leader Merrill Lynch. One of the world's top investment banks, Morgan Stanley serves up a whole smorgasbord of financial services.

The company operates through several primary business segments, comprising institutional securities (capital raising, corporate lending, financial advisory services for corporate and institutional investors); global wealth management group (brokerage and investment advisory services, and financial planning for individual investors and businesses); and asset management (asset management services in alternative investments, equity, fixed income). It also has in-house private equity operations.

Morgan Stanley spun off its Discover Financial Services operations in 2007, despite the credit card division posting some of its best results in recent years. Discover was the last remnant of the company's merger with the venerable Dean Witter at the end of the previous century. The same year, Morgan Stanley and Apax Partners Worldwide acquired insurance brokerage firm Hub International and sold the lightering business of Heidmar Group in 2007, a year after purchasing the marine transportation and logistics firm. In April, it completed the merger of its two principal U.S. broker-dealers into a single broker-dealer under the name Morgan Stanley & Co. Incorporated. In addition, the company settled charges that it falsely claimed to arbitration claimants and regulators that it had lost e-mails on September 11, maintaining its not-guilty plea but agreeing to pay $12.5 million. The previous year was also an active one for Morgan Stanley. In 2006, the firm also agreed to pay a $15 million fine to settle charges that it did not produce documents and was uncooperative during investigations performed by the Securities and Exchange Commission (SEC). Also that year, it sold its aircraft leasing business to UK-based Terra Firma Capital Partners for approximately $2.5 billion; acquired TransMontaigne, a Denver-based oil and gas transportation company; Heidmar Group, a Connecticut-based marine transportation and logistics firm; and bought Saxon Capital, a Virginia-based residential mortgage lender, for $706 million. In addition, the company bought the San Francisco property portfolio of Equity Office Properties and sold UK wealth manager Quilter to Citigroup. In one of the largest hotel chain sales in recent history, Morgan Stanley Real Estate Fund also purchased eight luxury resorts from CNL Hotels & Resorts. The acquisition was preceded by Morgan Stanley Real Estate’s purchase of eight of the company’s luxury resort properties in Arizona, California, Florida, and Hawaii. Two months later, Morgan Stanley announced its Principal Investments division had acquired a majority interest in Stadium Capital Associates to form Stadium Capital Financing Group, with a goal to assist teams in raising capital without incurring debt or diluting ownership or governing control. In July 2007, the Company completed the spin-off of Discover Financial Services, and in October, it announced a restructuring of its residential mortgage business.

In short, the past couple of years have been outstanding for Morgan Stanley, which moved up 10 spots in the Fortune 500 list due to tremendous growth in earnings: 51 percent in 2006. Revenues also increased 46 percent, mostly because of heavy trading and money management fees. The company’s success also earned it a spot on Dow Jones’ Global Titan list and the FT Global 500. Company growth outside of Morgan Stanley’s 3,000-person New York office is in full force, as it builds a physical presence in foreign markets, such as Mexico, Taiwan, Korea, Australia, and China, and targets markets in Turkey, Dubai, Qatar, Saudi Arabia, Kazakhstan and Central Europe. Still, Morgan Stanley has declined to release official hiring projections for 2007–08. But while hiring across the industry has been down recently, it’s been widely reported that the firm’s competitors are beefing up recruitment in the next two years. The company still actively recruits on university campuses at the MBA and undergraduate levels, and many new hires are being pulled from the summer intern pool. Without a doubt, Morgan Stanley is one of the most respected investment banks in the world, and it serves up a healthy buffet of financial services through its three divisions: institutional securities, global wealth management, and asset management.