Looking back through the prism of time, my words were prophetic. Stanley’s reputation took a severe battering during the down days that followed the dotcom boom (remember the complaints from disgruntled investors about Mary Meeker, Stanley’s uber-internet analyst?). I myself bought shares in a hot IPO for online recruitment company StepStone, which Morgan Stanley sponsored and lead managed in March 2000.
At launch, StepStone’s shares were priced at 32 Norwegian kroner. By mid 2002, the shares were languishing below 1 Norwegian kroner. Today the shares are worth one-third of what I paid for them and Morgan Stanley no longer makes a market on the company or produces research on it. I bitterly regret that I did not invest the £500 in a Gucci hand-bag. At least I would have had the use of a beautiful object. And today the sack would possess vintage status, so I could auction it for a fortune on eBay.
You might say it is invidious to single out Morgan Stanley: that all the investment banks were consumed by the maelstrom of malfeasance and greed that infested those years. But equally Morgan Stanley did not stand apart from the madding crowd. An investigation by New York Attorney General, Eliot Spitzer concluded that the firm failed to manage conflicts of interest between its research and investment banking divisions and failed to supervise senior research analysts, including la Meeker. Was it a quality of people issue (as I warned my friend) that produced this putrefaction? Or was it a result of the insidious Wall Street herd mentality? My parents always told me that even if your friend did something wrong, it didn’t mean you could. What do you think?
2001 brought the unseemly battle between wily John Mack, then president of Morgan Stanley, and even wilier Phil Purcell, chairman and chief executive, culminating in the ousting of Mack. The replay in 2005 ended with Purcell limping off stage and the triumphant re-entry of Machiavellian Mack. The saga has all the drama of a Shakespearean tragedy. Julius Caesar comes to mind.
In Act 3, when Mark Antony sees Caesar’s corpse, he proclaims:
“O mighty Caesar! dost thou lie so low?
Are all thy conquests, glories, triumphs, spoils,
Shrunk to this little measure?”
A perfectly appropriate question to ask Purcell methinks. By the way, what’s become of the pugilistic Purcell?
And depending on who was ruling the roost, various henchmen flourished or floundered. At the end of Purcell’s reign, highly respected bankers such as Steve Newhouse, Vikram Pandit and Joe Perella were diving, lemming–like, for the exit. Since Mack is back, human assets are still going down in the elevator at night and not reappearing next morning.
My friends at Lehman have refined stealing Morgan Stanley employees to a reputable art. The list of Stanley alumnae is becoming embarrassingly long. In primary school terms as it were: start at the beginning of the alphabet with Anda, go to the end with Zhu and in the middle add Liu, Meguid, Pereira and many more. No wonder, Morgan Stanley is viewed as limping behind Goldman Sachs in the investment banking egg-and-spoon race. The respective share performance supports this too. Goldman’s shares have more than doubled over the last three years, whereas Morgan Stanley stock is up only 48%.
And now comes the disconcerting news that Mack has hired his ‘old mucker’, Chris Carter as vice chairman of Morgan Stanley’s institutional securities’ division. Carter, endearingly described by the Financial Times as a “veteran investment banker”, spent aeons at CSFB. Indeed he was already dubbed “senior”, when I started in the markets in the mid-1980s. “It’s beyond bizarre,” an insider wailed. “Almost like bringing back a much loved sit-com with all the old characters but a decade too late.” I agree. Sex and the City so doesn’t do it for me anymore.
Also whenever, anyone hands me a card with the title vice-chairman emblazoned on it, I mentally file them in the graveyard section of my roller deck. Do you know a real player who is a vice-chairman? The initials VC for me are synonymous with virtually comatose and voiceless cipher.
Voluptuous cross-dresser is a racier possibility but is totally irrelevant juxtaposed next to Mr Carter’s name. One source remembered Carter as: “Unusually aggressive for a Canadian... a man who couldn’t be bothered to waste time on niceties.” A rival ruminates: “He certainly has nine lives. But you have to ask the question: ‘Why’s he still working? Surely, he doesn’t need the money anymore?”
I wonder what Jonathan Chenevix-Trench, chairman of Morgan Stanley International, makes of recent Kafakaesque developments. An erudite Englishman, Jonathan has been at the firm for over 20 years. “A very good, thoughtful brain-box,” surmised one commentator. I would like to meet Chenevix-Trench to glean his views on the revolving door that Morgan Stanley has become, how the firm is going to regain its edge and what lovely Managing Director, May Busch’ s new role (head of firm relationship management) entails?
Chris Carter was one of the market’s great characters. Along with men like Walter Henniges, Charlie McVeigh and Dan Tyree, he had ‘Nigella’ status. By which I mean, one merely had to mention the first name for everyone to know whom you were referring to.
Ian Hannam is another colossus of the capital markets. I was invited to his 50th birthday party in my guise as a “corporate wife”. Several hundred guests gathered in Belgravia for drinks, dinner and dancing.
Ian, unlike most anodyne bankers, has led an interesting and varied life. A renown rainmaker, he is chairman of equity capital markets at JP Morgan Chase. Hannam’s extensive deal list includes the merger and London listing of BHP Billiton, the creation of Xstrata and the flotation of South African Breweries.
