Morgan Stanley

When Will John Mack Ever Get To Be John Mack?

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johnmackisalone.jpgBloomberg tries its hand at our old “imagine you are inside the head of John Mack” trick. And they find the same thing in there that we did: a bright neon side flashing “Goldman Sachs was here.”

Ten years ago, John Mack tried to turn Morgan Stanley into Merrill Lynch & Co. Now the firm’s chairman and chief executive officer is chasing Goldman Sachs Group Inc.
Mack was president of Morgan Stanley in 1997 when he and then-CEO Richard Fisher sold it to Dean Witter, Discover & Co., seeking to blend their investment banking prowess with Dean Witter’s herd of stockbrokers. At the time, New York-based Merrill Lynch, the biggest brokerage, was the top U.S. securities firm.
Today’s Wall Street titan is Goldman Sachs, which last year produced a record $9.54 billion in profit through bigger trading bets and by building divisions in private equity and hedge fund investing. Mack, 62, drove a 70 percent jump in first-quarter earnings by increasing trading risks, profiting from investments and adding hedge funds of his own.
“He’s trying to copy Goldman, but that’s what he knows and what he does best,” said Jon Fisher, who helps manage $22 billion, including Morgan Stanley shares, at Fifth Third Asset Management in Minneapolis. “If Goldman is putting up the best numbers, then if you’re a competitor why wouldn’t you do what they’re doing?”

Poor Mack. Doesn’t he know trying to be Goldman is the old Blackstone?
Mack’s Morgan Stanley, With Record Profit, Still Chases Goldman [Bloomberg]

    John Mack’s No Good Very Bad Day

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    johnmack.jpgronperelman01.jpg
    JK! If John Mack’s been Googling himself much today—which his administrative assistant tells us he mostly certainly is*—, he’s got to be pretty pleased with the results. First, he beats Goldman and now Ron Perelman? We’d say it’s time for Mack to call it a day—something about quitting while you’re ahead and today’s episode of Oprah being one you “don’t want to miss.”
    Reuters reports the bank’s major victory today over billionaire and former husband of the lovely Ellen Barkin, when a Florida state appeals court threw out a $1.58 billion award previously bestowed upon Perelman over the 1998 sale of Coleman Co. to Sunbeam Corp. In May 2005 a jury had ruled in his favor, when he alleged that Morgan Stanley had helped Sunbeam “hide its shaky finances” while working on the purchase of Coleman.

    Coleman had received 14.1 million Sunbeam shares in the transaction. The stock became worthless after Sunbeam fired chief executive Al Dunlap and admitted it had inflated sales to prop up earnings. Sunbeam went bankrupt in February, 2001.
    In a 2-1 decision [today], Florida’s Fourth District Court of Appeal in West Palm Beach said Perelman failed to show he was damaged because he did not demonstrate what Sunbeam shares would have been worth had there been no fraud.

    A spokeswoman for Perelman called today’s ruling a “temporary setback” and that Big P “plans to seek a rehearing,” just as soon as he deals with the arduous task of assigning himself a fifth wife.
    Morgan Stanley Wins Reversal of $1.58 Bln Award [Reuters]
    *You get what I’m doing here.

      Arthur O. Sulzberger Jr: Doesn’t Like Speaking To Shareholder, Other Common Types

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      250px-The_new_york_times_building_in_new_york_city.jpgThe Wall Street Journal this morning tells the story of how a Chicago-born money manager based in London became the public nemesis of the chairman of the New York Times. It all started with something as simple as a phone call. Morgan Stanley’s Hassan Elmasry called Arthur O. Sulzberger, Jr. and Arthur O., well, he doesn’t answer phone calls from just anybody. And holders of five percent of the company’s stocks were, apparently, exactly that: just anybody. As one of our friends likes to put it, “Sucking on a silver spoon is so much less taxing than talking to vulgar people.”
      And thus began the painful process whereby a man named Sulzberger learned that these days just because you may not have heard of someone–and indeed, that person may never have been invited to the same dinner as you even as a courtesy–doesn’t mean that person is a nobody. And it certainly doesn’t mean that person cannot publicly humiliate you.

      How a Money Manager Battled New York Times       [Wall Street Journal]
      And previously on SuperMogul: Sulzberger vs. Elmasry – Round 3 and And this time, it’s personal.

        Morgan Stanley Gets Dodgey

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        Video of the Morgan Stanley Dodgeball tournament. It’s like real life: team building by eliminating the slow and the weak. Especially the girls, apparently. [Via Bankers Ball]

          • 26 Feb 2007 at 11:59 AM
          • CEO

          Morgan Stanley Considers Goldman Sachsian Approach To Compensation (Follically-Speaking)

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          john_mack.jpgJohn Mack, like the Tom Arnold of investment banking (take a second on that one), has overcome huge odds to fight his way back to the top of his game.** Last year, the Morgan Stanley chief, who was shown the door in 2001, received a raise of 38% to take home $41.4 million, reports CNN Money. The package was comprised of a base salary of $800,000, $36.2 million in restricted stock, $4 million in other stock options, miscellaneous compensation of $15,447, $67,963 in pension benefits, $6,100 in matching 401(k) money and, perhaps most importantly, in the parlance of our times, use of the company jet valued at $321,848.
          Earlier: How Goldman’s Managed To Stay Out Of The Backdating Scandal
          Morgan’s Mack sees hefty pay raise [CNN Money]
          **Rocky seemed too easy and we thought it was about time we—Carney—went public with our feelings for Carpool.

            Rounding Error: How Morgan Stanley Turned a $10.5 Million Trade Into A $10.5 Billion Trade

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            morganstanleymath.gif
            So a few years ago, a Morgan Stanley trader placed a $10.5 billion order for shares to cover a short position. The problem is that he was only trying to buy $10.5 million of the stock. You can only imagine what this did to the markets. But, believe it or not, this kind of “rounding error” only costs you $300,000 if you are an investment bank.
            Reuters explains how the mistake happened.

            According to the NYSE’s February report on disciplinary actions, a customer contacted Morgan Stanley on Sept. 1, 2004, to unwind part of a swap.
            A Morgan Stanley affiliate was the counterparty to the swap, and had hedged its exposure by maintaining a short position in shares underlying the trade. As a portion of the swap was unwound, a Morgan Stanley trader tried to buy a basket of stocks to cover some of the firm’s short position.
            At about 9:32 a.m. ET that day, the trader entered an agency order on behalf of the firm to buy 100,000 units of the basket to cover a portion of the short position, the NYSE said.
            But the system used to create the basket built in a multiplier of 1,000, so the trader erroneously created a basket with a value of $10.8 billion instead of $10.8 million.

            A few of our usual questions: anyone know who this unnamed “trader” is? Where is he working these days? (Presumably not Morgan Stanley.)
            NYSE fines Morgan Stanley for trade error that disrupted market [Reuters via CNNMoney.com]

              • 03 Jan 2007 at 3:35 PM
              • legal

              As It Turns Out, Morgan Stanley May Be Too Young and Sexy For Its Own Good

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              grandpa.gifMorgan Stanley may now sport 6% less sexual harassment, but they are allegedly still totally hating on grandpa.

              A former regional director in Morgan Stanley’s wealth-management business filed an age-discrimination lawsuit against the firm and two of its human resources executives Wednesday.
              In a lawsuit filed in federal court in Manhattan, Edward M. Sullivan, 56 years old, alleged that human resources executives Jeffrey Brodsky and Eric Kayne conspired to terminate Sullivan beginning in fall 2005 despite “Sullivan’s distinguished, highly acclaimed, twenty-five year career” at the firm.
              Sullivan, of Darien, Conn., was terminated in May 2006, according to the lawsuit.
              The complaint alleges the executives went so far as to interfere with the annual evaluation process at the firm at the end of 2005 and to substitute “their own made-up poison-pen critique of Sullivan in place of the legitimate evaluations of him.”

              Ex-exec files age suit vs Morgan Stanley [Business Week]