Washington, April 1: Two Indians have thrown Wall Street into tumult, casting Morgan Stanley, one of its pillars, into unprecedented turmoil.
Credit rating firm Standard and Poor's has already downgraded Morgan Stanley, citing uncertainty about the company's leadership as a result of the unprecedented revolt by two Indians and several other executives.
The long-simmering troubles burst into the open after Vikram Pandit, 48, the president of the company's institutional securities division, walked off the firm's trading floor on Tuesday to prolonged applause from staff and resigned.
Pandit was in line to be chief executive of Morgan Stanley until this week. Also walking off with him was John Havens, the head of the institutional equities division.
The two men revolted after Philip Purcell, Morgan Stanley's chief executive, promoted two of his supporters, Zoe Cruz and Stephen Crawford, as co-presidents, making them potential contenders for the company's top jobs, superseding Pandit and Havens.
A day after Pandit and Havens announced their resignations, Guru Ramakrishnan, the popular head of Morgan Stanley's global trading technology, also quit.
Yesterday, a full-page advertisement was taken out in The Wall Street Journal by a group of eight former executives of Morgan Stanley, including former president Robert Scott and former chairman Parker Gilbert.
They urged Morgan Stanley's board to remove Purcell, citing the company stock's poor performance, decline in revenue and low margins during the past five years.
These former executives together own 11 million Morgan Stanley shares, more than the stock owned by the company's board.
So far, the board has stood behind Purcell, but if a large number of investors throw in their support to Pandit, Ramakrishnan and others, it may be forced to rethink.
The revolt by Pandit and others is the culmination of eight years of tension in the company since Dean Witter, Discover & Co. merged with investment bank Morgan Stanley in 1997 to become Morgan Stanley Dean Witter.
Purcell was Dean Witter's chief executive while Pandit and the others are from the more venerable Morgan Stanley side.
Purcell quickly ousted Morgan Stanley's president, John Mack, and proceeded to try for complete control of the firm demanding total loyalty from executives from the pre-merger Morgan Stanley side.
As a result, the merger never gelled and in recent years, Morgan Stanley, known as the 'original white-shoe' firm on Wall Street, has been overtaken by others such as Goldman Sachs.
It is unclear what effect the company's troubles will have in India, where it announced a partnership in 1997 with J M Financial Services of Mumbai in investment banking and institutional equity sales.
Two years later, it commenced operations in India as J M Morgan Stanley.