Last night minutes after midnight, the WSJ announces that federal prosecutors are investigating Morgan Stanley. Morgan Stanley’s new CEO Jamie Gorman was in Tokyo. According to Gorman, this was new news to him. So, he was informed of a criminal probe of his firm through a Ruppert Murdoch media outlet.
I am laughing. This happened to me. Ask Ed Pound, formerly of US News and World Report, then at the National Journal and now at the Recovery and Transparency Accountability Board. He was the guy who helped run the same game on me and my company.
Gorman is lucky. Deloitte Touche is his auditor and he puts a lot more money in their pocket.
When the first few leaks did not tank us, I then learned about my auditor’s resignation from Ed Pound as well. Indeed, the partner at Price Waterhouse who ran our audit learned about it from me. Price Waterhouse resigned through the New York office without telling the partner in charge. It would appear that Price Waterhouse in New York, the Department of Justice and US News and World Report were coordinating way above her level.
Imagine. The Department of Justice investigating Morgan Stanley for mortgage market corruption. The same Department of Justice that ran the honest folks out of the U.S. Department of Housing and Urban Development in 1996-97 so that the housing bubble could proceed. (See 1, 2)
The press runs the story throughout the evening and early morning. New York Times, CNN, Marketwatch, Reuters and so forth. The stock opens down more than $1.
I wonder who set up what short positions before the WSJ announced?
If Morgan Stanley settles with the government, I wonder if the Congressional appropriation staff will give DOJ credit for the settlement proceeds in their budget deliberations? After all, enforcement has become big business too.
As long as the money pours into the New York and Washington law firms, this will go on for quite some time.
After all, accountability American style is big business.
The person who will be hurt is the one who pays his or her taxes while their pension invests in Morgan Stanley stock. They will watch as their wealth is drained away on all sides.
Related Reading:
Morgan Stanley’s Doomed Baldwin CDOs Thwarted ‘Natural Process’
Bloomberg.com (14 May 10)
