Hedge funds shift away from Morgan Stanley, Goldman Sachs prime brokerage

Fri Sep 19, 2008




Hedge funds moved billions of dollars out of their prime brokerage accounts at both Morgan Stanley and Goldman Sachs this week, as the financial crisis on Wall Street deepened following the bankruptcy of Lehman Brothers and the Federal Reserve's virtual takeover of AIG.

Just months ago, both firms benefited from a flight to quality when Bear Stearns was forced into the arms of JPMorgan, which had relatively little prime brokerage business before Bear's operation was folded into it. Now, "everybody's trying to go to JPMorgan," said one investor, reflecting the heightened stature JPMorgan has gained through the crisis. Credit Suisse and Deutsche Bank are picking up a lot of business as well, as are universal banks such...

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