Matt Levine writes in the Wall Street Journal: Morgan Stanley Now Obeying Rules, Reducing Risks, Eating Cupcakes
So while of course it's possible that this is just next-level perception manipulation and I've fallen for it -- that Morgan Stanley has found a novel way to take on immense amounts of complex risk and hide it behind an army of retail brokers and a layer of cream-cheese frosting -- I think that this story is what it appears to be. Morgan Stanley seems to be de-risking by cutting back on risky activities, and responding to new regulations by obeying them.On the New Wall Street, Boring Is Better [more inside]
Visualisations of corporate ownership for six banks: Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, JP Morgan and Wells Fargo.
Where Banks really Make Money On IPOs
All of these numbers are hypothetical, of course, but the bigger point is simple: if Goldman manages to get kickbacks, in terms of extra commissions, of more than 7% of its clients’ profits, then it has a financial incentive to underprice the IPO. And Goldman’s clients were desperate to give it kickbacks: they didn’t just route their standard trading through Goldman, since that wouldn’t generate enough commissions. Instead, they bought and sold stocks on the same day, at the same price. Capstar Holding, for instance, bought 57,000 shares in Seagram Ltd at $50.13 per share on June 21, 1999 — and then sold them, on the same day, at the same price. Capstar made nothing on the trade, but Goldman made a commission of $5,700. Capstar’s Christopher Rule says that in May 1999, fully 70% of all of his trading activity “was done solely for the purpose of generating commissions”, so that he could continue to keep on getting IPO allocations.Rigging The IPO Game [more inside]
The Cabbie v. the Morgan Stanley Executive "Those of you who have any degree of contact with the financial blogosphere no doubt caught the news today that one William Bryan Jennings, the co-head of fixed income for the Americas for Morgan Stanley, was arrested and charged with second-degree assault, theft of services and intimidation by bias or bigotry and released on bail of $9,500. He has been put on leave." [Via].
Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs? The Real Housewives of Wall Street (via) [more inside]
Matthew Robson, aged 15 years & 7 months, was asked to describe how he and his friends consume media by the London research branch of Morgan Stanley, where he is a summer work intern. The teenager spent a day on the briefing note, after polling some friends by text message. His write-up impressed the right people (direct link to pdf report). "Without claiming representation or statistical accuracy, his piece provides one of the clearest and most thought provoking insights we have seen. So we published it." After being published, the note had generated five or six times more feedback than the team's usual reports. Lauded by professionals, his claims were met with disagreement from some peers. (via)
Economic 'Armageddon' predicted by Stephen Roach, the chief economist at investment banking giant Morgan Stanley. He's been right before.