Heavy lifting ahead
Mon Mar 30, 2009
Faced with constraints on precious capital and a shrinking client base, prime brokers struggle to profit from an industry in flux.
Faced with constraints on precious capital and a shrinking
client base, prime brokers struggle to profit from an industry
in flux By Josh Friedlander
After Lehman Brothers' catastrophic collapse last September,
the financial markets grew so chaotic it seemed conceivable
that even the two investment bank and prime brokerage leaders,
Goldman Sachs and Morgan Stanley, could follow in Lehman's
footsteps. In those crazy days last autumn, saber rattling or
grandstanding wouldn't have been surprising. Yet Morgan
Stanley's chief executive, John Mack, still managed to shock.
Desperate to halt his stock's freefall, Mack publicly pushed to
suspend short-selling. "What's happening out there?" Mack wrote
in an internal memo on September 17. "It's very clear to me -
we're in the midst of a market controlled by fear and rumors,
and short-sellers are driving our stock down." It was a stance
that denied the import of Morgan's considerable revenue from
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