5 Reasons Morgan Stanley Can’t Catch A Break This Week
Barely two weeks after it was downgraded to from A to A- with a negative outlook by S&P, Morgan Stanley is having another bad week in the press. With Europe in crisis and Jon Corzine seemingly on Capitol Hill on an hourly basis, press officers at banks must have hopped for a week out of the headlines. Morgan Stanley has not been so lucky.
Barely two weeks after it was downgraded to from A to A- with a negative outlook by S&P, Morgan Stanley is having another bad week in the press. With Europe in crisis and Jon Corzine seemingly on Capitol Hill on an hourly basis, press officers at banks must have hopped for a week out of the headlines.
Morgan Stanley has not been so lucky.
Here are five stories that the white shoe firm wish would go away:
1) Your ex-CEO through a lavish going away party for himself.
John Mack held an exclusive after-party to his official retirement dinner using company cash, a move that is less than in tune with these recessionary times.
As we reported earlier, after-party took place at The Temple of Dendur, an ancient Egyptian temple reassembled at the Met, costs companies that become “patrons” of the museum an up-front fee of $60,000, which then allows them to rent the space once a year and then pay another $38,000 to hold a two-hour reception.
2) Before that, Mack was talking about how if he did it all over again, he’d ditch Wall Street and sell women’s shoes instead.
When a long-time leader of a firm retires, the playbook is clear.
He makes a few select media appearances, talks about the honor of working with such great people, how he will miss them all, how his successor will push the firm forward and that the whole ride was so great that he’d do it all over again.
Less ideal is that he reveals his long-held passion to be a women’s shoe salesman. Although you have to admire Mack’s candor, it was hardly on message.
3) You were forced to take a $1.8 billion loss to settle a mortgage-backed securities related lawsuit.
Morgan Stanley settled a suit with bond insurer MBIA over faulty mortgage-backed securities at a $1.8 billion pre-tax loss.
Investors actually took the news positively, but talking about how a loss is actually ok is never how a financial institution wants to spend its Tuesday.
4) A notorious bank analyst chopped almost 1.5% off your stock price by cutting his price target and earnings estimates.
Yesterday, Dick Bove cut his price targets and estimates on Morgan Stanley, along with its competitor Goldman Sachs. Morgan Stanley closed down 1.4% at $15.17.
5) You are giving back $700 million investors in your sexy global real-estate fund.
The Wall Street Journal is reporting that Morgan Stanley has been forced to return approximately $700 million and cut fees in order to persuade investors to keep its global real-estate fund alive.
Getting investors to put up large amounts of cash with steep fees and significant redemption restrictions used to be easy, especially if you called the vehicle a ‘global real-estate fund’. Not any more and Morgan Stanley will have to scramble to find another revenue source to make up for lost fees.
All in all, not the kind of stories the media team at any bank wants to deal with.