(Corrects share price fall in last paragraph to down 4 cents
from down 4 percent)
* Kelleher, Taubman to head institutional securities unit
* Ruth Porat new chief financial officer
* Gorman makes changes ahead of becoming CEO on Jan. 1
(Updates with details, comments, share price)
By Steve Eder
NEW YORK, Dec 8 Morgan Stanley's (MS.N)
incoming CEO, James Gorman, began putting his fingerprints on
the firm, making its chief financial officer and the head of
investment co-heads of its crucial institutional securities
The appointments of Colm Kelleher, Morgan Stanley's
financial chief through last year's financial crisis, and key
banker Paul Taubman to jointly run the unit is a sign of its
still-prized position within the bank.
Gorman, who is set to replace Morgan Stanley Chief
Executive John Mack on Jan. 1, comes from the wealth management
side of the business, while the newly appointed executives will
oversee sales and trading and investment.
"Gorman wants to put in place some folks that he can rely
on on that side of the business because maybe that's not his
strong suit," said Walter Todd, portfolio manager at Greenwood
Capital, which owns 125,000 shares in Morgan Stanley.
Ruth Porat, global head of the financial institutions
group, was named chief financial officer, succeeding Kelleher.
Morgan Stanley swung to a profit in the third quarter,
joining competitors like Goldman Sachs Group Inc (GS.N) and
JPMorgan Chase & Co (JPM.N) in the rebound that has swept the
industry since last year's crisis.
But its trading operations have lagged both rivals.
BURNISHING THEIR RESUMES?
Displaced in the management shuffle is Michael Petrick, who
led Morgan Stanley's the trading unit.
Morgan Stanley spokeswoman Jeanmarie McFadden said
Petrick's status was unclear and that the firm was in
dicussions with him about another role.
Kelleher, 52, will oversee sales and trading, while
Taubman, 48, will focus on investment banking.
Overall, the institutional business posted pre-tax income
of $1.3 billion in the third quarter.
"We have more work to do in our trading business, and Colm,
Paul and I are all committed to continuing to attract
world-class sales and trading talent in the months ahead,"
Gorman, 51, wrote in an internal memo.
Both Kelleher and Taubman were seen as candidates to
replace Mack, who will retain the title of chairman.
Michael Hecht, an analyst with JMP Securities, said
Kelleher and Taubman would have ample opportunity to burnish
their resumes for future CEO jobs while running institutional
"The best way to do that is to have more experience running
a business and successfully fixing a business where they had
the biggest competitive gap and the biggest opportunity," Hecht
Taubman, global head of investment banking since 2007, has
more than 25 years with Morgan Stanley. Earlier, he was global
head of mergers and acquisitions.
Kelleher became chief financial officer in 2007, previously
working as head of global capital markets. He joined the firm
Kelleher's move to institutional securities left an opening
for Porat, 52, to take over as chief financial officer.
Porat led the team that advised the U.S. Treasury on Fannie
Mae FNM.N and Freddie Mac FRE.N. She is a 22-year veteran
of the firm, who began her career in mergers and acquisitions.
Morgan Stanley also announced that Thomas Nides, the chief
administrative officer, will also become chief operating
officer, overseeing operations and technology.
Jim Rosenthal, head of firm-wide technology and operations,
was appointed as chief operating officer of Morgan Stanley
Smith Barney and head of corporate strategy for Morgan
Morgan Stanley shares were down 4 cents at $30.34.
(Reporting by Steve Eder in New York and Santosh Nadgir in
Bangalore; Editing by Maureen Bavdek, Dave Zimmerman and Ted