The $13.25 billion acquisition of Electronic Data Systems by Hewlett-Packard—the ninth largest tech deal ever, according to DealLogic—has moved the M&A league table standings, DealJournal Heidi Moore reports. Before the deal was announced, Goldman Sachs and Morgan Stanley led this year’s ranking from advising technology companies on mergers. But neither bank has a role in the H-P deal, pushing them down in the rankings

“Goldman ranked first with $14 billion of announced deals to its credit this year, and Morgan Stanley ranked second with $11 billion according to investment-banking research provider Dealogic,” Moore writes. “But now, Goldman is in third place, displaced by Lehman Brothers and J.P. Morgan. Lehman has jumped from fifth to first place with $17 billion of deals to its credit, while J.P. Morgan — which, just yesterday, languished in seventh place with only about $2.2 billion of tech deals to its credit — has vaulted to second place in the rankings from seventh place. Morgan Stanley has fallen to No. 5.”

Citigroup and Evercore Partners advised Electronic Data on the deal. J.P. Morgan Chase and Lehman Brothers advised Hewlett-Packard.

Hewlett-Packard: The Advisers [Deal Journal]

Morgan Stanley is now (like, right this second, according to Alley Insider) laying off an additional one thousand employees, on top of the thousand from a few weeks ago. The Journal says the cuts will affect mortgage employees, though we hear “no one in Fixed Income is safe.” And yet, Two and a Half Men is being allowed to come back with new episodes, as early as mid-March. Doesn’t seem fair. Got any more info? About anything? Anything at all? We're listening.

Morgan Stanley to Lay Off 1,000 Mortgage Employees [WSJ]
Morgan Stanley Prepares To Lay Off 1,000 Workers [WSJ]

The new Trader Monthly is out today and since a lot of it is unavailable online and I've never seen or heard of anyone voluntarily buying the print edition, I decided I would read it for you and say something if anything good happened to come up. I never thought I'd say this, but something did. A profile of Morgan Stanley CEO John Mack, by CNBC reporter Charles Gasparino, which begins with, I shit you not, a quote from Goodfellas. My original intention was to humorously summarize the verbal stylings of this mythical creature, but I ultimately realized that to try and imitate/compress the work contained within is akin to etching a stick-figure rendition of the Sistine Chapel. Thus, I will simply submit this excerpt, and invite all to buy a copy for themselves (or deign to read the free one in the office). Before I do, a couple of words: I get the sneaking suspicion we are seeing the Observer Effect at work here. No Sleeves knows full well we are chronicling his every dagoesque utterance, and we submit he is subconsciously ginning up his I-talian in response to our observations. This sucks for two reasons: First, he is muscling in on my turf: this shit is getting hard to parody. Second, it's a pose: Any pipe-banging paesano would cut this make-up wearing blow dry boy down before breakfast, sleeveless sweatshirt and all. Anyway. I can’t stay mad at him. Let us behold:

“IF YOU’RE PART of a crew, nobody ever tells you that they’re going to kill you — doesn’t happen that way. There weren’t any arguments or curses like in the movies. See, your murderers come with smiles, they come as your friends, the people who’ve cared for you all of your life. And they always seem to come at a time that you’re at your weakest and most in need of their help.” — Henry Hill, Goodfellas

New York’s five major families, despite decades of turf wars and nasty infighting, have coexisted remarkably well in recent times, which isn’t surprising considering how much money they’re raking in — more than enough for everybody.

I’m speaking, of course, about the StreetMob: Goldman Sachs, Morgan Stanley, JPMorgan,Merrill Lynch and Lehman Brothers. I’ve always found the similarities between Wall Street and La Cosa Nostra striking. Bosses. Made guys. Foot soldiers. Tribute. Sitdowns. Cozy ties with politicians. Hits.

Of course, people don’t get “whacked” on Wall Street — not literally, anyway. But they do get shot down execution-style, and such hits are often rather Mob-like. Firings are usually preceded by fake smiles. Demotions often occur with disingenuous gestures of support. Take, for example, the number Morgan Stanley’s CEO, John Mack, recently did on Zoe Cruz.

Out Comes The Knife [Trader Monthly]

So who is on this list of 14 companies under investigation by the FBI for their involvement in the subprime mortgage crisis? The FBI apparently intends to keep us in suspense because they won’t give details. All we know is that they are looking into “allegations of fraud at various stages of the mortgage process, from companies that bundled the loans into securities to the banks that ended up holding them.”

So let’s recklessly speculate. Two companies that are sure to be on the list are Bear Stearns—which is already under investigation by federal prosecutors and the SEC—and Countrywide, which is both the biggest home loan lender and also facing an SEC inquiry. Goldman Sachs is very likely on the list. It was accused on the pages of the Sunday New York Times of misleading clients by packaging CDOs while shorting the mortgage market. We know that at least one Senator read the article and has been making a stink, and we know that federal investigators often get their leads by reading the paper. What’s more, Goldman Sachs has said that it is cooperating with an unnamed government agency.

Morgan Stanley has also admitted to cooperating with unnamed government authorities. At first, everyone assumed this was the SEC. But why wouldn’t they come out and say that? More likely they declined to name the agency out of fear that saying they were cooperating with the FBI would tar them with serious criminality—rather than the everyday Wall Street shenanigans implied by an SEC investigation.

So that gives us four good leads. Who else is a cylon on the list? No doubt some additional mortgage companies and some home builders. Maybe the ratings agencies are also. Leave your guesses in the comments section below.

FBI Launches Subprime Probe [Wall Street Journal]

A (very) recently fired Credit Suisse employee tells us that “Every conference room on the CMBS floor has an HR representative working through people as they show up for work. Analysts and Associates seem to be the first out the door.” We understand that for the victims, this might seem like bad news, and yeah, you’ll probably feel weird about going to Shake Shack for a while, but the flipside is that you won’t have to deal with the embarrassment of being employed by Bear Stearns, when the two banks merge. In related news, Morgan Stanley has announced plans for its own population restructuring, as modeled after the redistribution project in the Sudan. If you have any other info, feel free to share, or not share, otherwise, enjoy this one on me:

Bonuses out of Morgan Stanley will increase from $8.39 billion to $9.93 billion this year. The extra spending money will serve MS employees well, when they're all fired to make up for a near-$10 billion writedown. Taking one for the team is CEO John Mack, who will reportedly be pulling a Jimmy Cayne and forgoing his pile of unmarked twenties this year, and however unlikely, we move that for this statement alone, CFO Colm Kelleher should be stripped of his bonus, too, or given his plus Mack's, I can't decide: "If you were to normalize our business and take out this $9.4 billion charge, you would see that we had a record year across the whole enterprise."

Morgan Stanley Bonus Pool Rises as CEO Forgoes Pay [Bloomberg]

[Alternative headline: Morgan Stanley: Okay, We're Thinking Of A Number Between 1 And 4 Billion. Know What It Is? Analysts: Your Credit Score. Your 900 Number. Your- MS: Stop. None Of These Are Right. None Of Them. Analysts: The Number Saltines John Mack Can Eat In A Minute Without Water. MS: Wrong...But Also Right...If You're Picking Up What We're Throwing Down. Preference?]

Morgan Stanley beat analysts' expectations for how badly this last quarter went, when it announced a net loss of $3.59 billion ($3.61/share), compared to last year's net income of $1.54 billion ($1.44/share). Analysts had previously predicted losses of 39 cents/share. The extra dollar or so probably has something to do with the $9.4 billion in write-downs, and unforseen costs related to MSIM's holiday party at the China Club last week. Speaking of China (Investment Corp.), the sovereign wealth fund was on hand to soften the negative $450 million revenue blow, by acquiring a 9.9 percent stake in the company, as China is wont to do. (Watch as it blows up in their faces, it'll be funny.) Also helpful for distracting from the facts was CEO John Mack's comment that "these [are] isolated losses by a small trading team in one part of the firm." I don't want to say we're hoping that the entire team is going to get laid off, because we're not, but should it come to that, wouldn't it be nice if they could go out in style? You know what to do.

Morgan Stanley Swings to Loss Amid Mortgage-Related Woes [WSJ]

Not surprising given that John Mack used to work at a Gap, but:

"MS bonuses- a few of the high visibility/revenue guys were up as much as 20 percent but, broadly, most YE bonuses were -10 percent vs. 2006 for those in the highest tier in terms of performance appraisal. This applies to wealth management."

Also helpful if you happen to know how to unwind a large amount of exposure to CDOs or hung bridge loans for reckless LBOs, though in no way necessary. But you must be Vietnamese. On this point they are unwavering. Not Vietnamese? Hit the bricks.

Morgan Stanley is now saying that there will definitely be a recession and there's nothing you can do to stop it so you might as well just give up. We're all going to die eventually, it's just a matter of when. Related/unrelated? At MS's IED party last night, "There was a slideshow on a large screen that contained awkward photos of associates and analysts (most people were not smiling)...a lot of Sean Paul...a MD walking around with a blinged out Santa hat giving his business card to anyone that would compliment his style...and one very sad analyst talking to the bartender about how even the low hanging fruit he hoping to score with wouldn't give him the time of day."

Morgan Stanley issues full US recession alert [Telegraph]
Recession Watch: Morgan Stanley Finally Sees Weakness [Alley Insider]

Which is taking place tomorrow at Lotus. Yes, Lotus. The festivities begin at the usual time, but apparently the "real party is starting around ten,” which is when John Mack will be showing up, after having pregamed with us at Tortilla Flats, because, you know, when in Rome. Anal_yst will be TiVo'ing "Gossip Girl," and he doesn't even work at Morgan, so you know the expectations are high.

I haven't worked at a bank for about fifteen years so I don't know if this is standard and I'm just out of the loop but someone told me recently about Morgan Stanley's felony prevention program and I sort of love it. Apparently, in light of the number of finance professionals who have openly admitted to being down with insider trading and the proliferation of groups to support this very cause (not like "let us help you with your insider trading problem" but more "so you want to insider trade? here's how"), Morgan Stanley has created a program where they bring in felons to talk to prospective felons (these being MS employees) about how they once committed felonies AND IT RUINED THEIR LIVES. It's all very "Oh, you thinking about smoking some crack? Maybe just a little in the men's room, take the edge off the morning? WELL DON'T BECAUSE I DID IT AND LOOK AT ME NOW! THAT ONE HIT FUCKED EVERYTHING UP. NOW I CAN'T EVEN GET A JOB AT CITIGROUP."

But the one thing we wonder is: yes, this whole thing seems like it would be hilarious to watch and we definitely wouldn't turn down an invite to observe the next one taking place, but does it work? Afterwards, are the MS boys and girls all, "Wow, that scared the shit out of me, I will never do anything illegal (again)"? or more, "Yeah, you went to jail but look at this awesome gig you've got now. This is the sort of speaking tour Tim Sykes would kill for, and, I have to say, so would I"? That's an actual question to those of you contemplating insider trading right now. (The other is, to the LEH readers out there, does Lehman have a similar program? Doesn't it seem like something that would be right up Dick Fuld's alley? Can't you see him leaving important meetings early to take part in the sessions just so he can violently get in his employees' faces and maybe throw one or two up against the wall under the guise of "getting into character"? And if the answer's no, would you consider suggesting it, and letting me watch?)

Doesn’t it feel like we haven’t heard from Morgan Stanley in decades, besides the cryptic messages an analyst from the power and utilities group leaves on Carney’s voicemails every now and then that are mostly just heavy breathing punctuated by moments of epileptic crying? It’s probably because the securities firm hasn’t been screwing things up nearly as badly as everyone else. Luckily, that tide is turning. Mo’ Stan may write down $6 billion due some bad luck with mortgages, etc, and Fox-Pitt Kelton Cochran Caronia Waller analyst David Trone, the poor man’s Meredith Whitney, has cut his recommendation from ``in line'' from ``outperform.'' It’s not as impressive as the work Merrill Lynch and Citigroup have been doing, and John Mack can probably forget about being fired, but it’s something.

Morgan Stanley Writedowns May Reach $6 Billion, Fox-Pitt Says [Bloomberg]

Morgan Stanley recently--today-- informed its employees that it is no longer acceptable to “use firm computers to comment on blogs.” The first Morgan Stanley employee ballsy enough to post a comment on this post (we'll check the IP address to confirm it’s not some punk JPM banker) wins something pre-tay, pre-tay, pre-tay good (okay fine--it's drinks with Keith Hahn, on Carney, who owes him. Because he spotted him for lunch one time a few months back. Why, what were you thinking?).

Laid-off second year analysts at Morgan Stanley are said to be receiving sixth months of salary severance, which seems pretty nice, though not as nice as an actual job. No pro-rated bonuses, because apparently they received their first ones in August. Anyone know what the non-minion packages from Morgan look like, or what the other banks are giving out? The stingy bastards at Credit Suisse are rumored to be offering vouchers to Shake Shack, but they’re only good for the next week, and for only $3.50, which doesn’t even cover the cost of a Shackburger. Maybe JP Morgan and Bear Stearns are being more generous.

Morgan Stanley never called to answer our question as to whether or not it was putting off today’s scheduled layoffs until tomorrow or even next week, but apparently things are going as originally planned, with the bank eliminating 300 jobs this morning. The cuts are mostly from fixed-income, equities and
investment banking (about 200 jobs in the U.S., the rest in Europe), and are said to include senior personnel (David Warren, a managing director*) and a handful of plebes. We’ll let you know about the important stuff (pro-rated bonuses?) as it comes. (Want to speed things along? You know where to find us.)

*which sources, though not spokepeople, at MS confirmed as of 11:55 a.m.

Morgan Stanley Firing 350 I-Bankers Today [Silicon Alley Insider]
Morgan Stanley to cut 300 trading, credit jobs [Reuters]

Are the firm-wide layoffs coming on Wednesday at Morgan Stanley being delayed to Thursday or even next week? One Morgan Stanley employee (for the next few days, at least) says yes. Now, let’s hear from the others. Don't be shy, you don't owe John Mack a thing.

Morgan Stanley’s quantitative strategies group, which lost $480 million during the quarter ended August 31, disclosed in a regulatory filing today that out of its 14 losing days, on its best one, $390 million was misplaced. The securities firm said that it was “caught off guard” by “widespread” investor selling, which their models had not been designed to account for.

Morgan Stanley Traders Lost $390 Million in One Day in August [Bloomberg]

Former Morgan Stanley lawyer Randi Collatta and her husband Chris have been sentenced to four and three years of probation, respectively, including six months of home confinement which will likely be spent arguing whose idea it was to get involved in an insider trading ring on Wall Street for which they are being punished. The Collattas were among 13 people charged in March for participating in the $15 million scam, though the Bayport, N.Y. couple only made about $9,000 off of the scheme, prompting Judge Victor Marrero to say that they were at the “bottom of the food chain,” which has got to hurt. Ms. Collatta apparently “wept uncontrollably” after hearing that she “faces” disbarment. One wonders what she’ll do when she finds out that she’s “definitely” going to be disbarred. Depressed enough yet? Randi will also serve 60 days in prison on the weekends and evenings, a special provision she was given because her husband’s cancer and severe heart problems necessitate that she be able to provide medical insurance.

Ex-Morgan Insiders Get Home Time [New York Post]

Morgan Stanley has cancelled recruiting for next year’s institutional securities class, a (former) MS candidate was told by the firm yesterday (that’s got to be an awkward convo we would’ve loved to have been in the room for). Next June’s fresh meat will be comprised solely by those who received offers this past summer (and this bit of news is sure to make anyone on the fence accept immediately—they are now part of an “elite” group, which employees of Morgan Stanley hardly ever get to say). Think the bank will spin this by saying the cap is necessary because too many Mackophiles (that’s what they like to be called) from the summer said yes? If they have someone who’s even mildly competent in charge of PR, we think so!