NEW YORK (TheStreet) -- Shares of Morgan Stanley  (MS) - Get Report rose 1.79% to $36.47 in morning trading Monday after the financial services company agreed to sell a beleaguered natural gas business, according to Reuters.

Morgan Stanley agreed to sell Wentworth, a compressed natural gas business that became the subject of regulatory scrutiny shortly after its debut in 2014.

Wentworth filed an application with the U.S. Department of Energy in August to construct, own, and operate a compression and container loading facility in Texas. The Federal Reserve quickly turned its attention to the plan. The Fed has been scrutinizing banks' physical commodity operations and reached out to contacted Morgan Stanley with questions about Wentworth.

After the Fed made contact, Morgan Stanley CEO James Gorman told employees that the business had to be divested, which put its future in doubt.

Financial terms of the deal were not disclosed.

The financial services company will transfer Wentworth to a newly formed company called Pentagon Energy LLC. Alberto Chiesara and Ryan Comerford, two Morgan Stanley managers tied to Wentworth, will join the new company as principals, Reuters reports.

Simon Greenshields, the former co-head of Morgan Stanley's commodities business who had reportedly been trying to leave the bank via a Wentworth sale, will not join Pentagon Energy.

"Morgan Stanley simply had to sell the unit," says Jack Mohr, Director of Research for the Action Alerts PLUS charitable trust. "Regulators are increasingly putting pressure on the big banks to exit physical commodities trading, as a Senate subcommittee is set to release a highly critical report this November."

"The last thing Morgan Stanley needs is another reason for the regulators to go after them, and the business is far too volatile to be worth the risk," Mohr continues. "The Fed has been investigating the Wentworth business for over a year now and I assume MS is trying to get ahead of any legal action. Overall, smart and necessary move."

Insight from TheStreet's Research Team

Morgan Stanley is a core holding of Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. During the most recent weekly roundup, this is what Jim Cramer, Portfolio Manager & Jack Mohr, Director of Research - Action Alerts PLUS had to say about the stock:

Morgan Stanley (MS:NYSE, $35.83; 3,200 shares; 4.46%; Sector: Financials): The shares retreated slightly this week after the company announced its CFO, Ruth Porat, will leave in April to become CFO at Google (GOOGL). Porat has been CFO of Morgan Stanley for the past five years, culminating a career that began in 1987 and included leading the Financial Institutions banking team during the 2008-09 financial crisis. Jonathan Pruzan, a 21-year Morgan Stanley veteran and currently head of the bank's Global Financial Institutions Group, will succeed Porat upon her departure. While Pruzan is well known within Morgan Stanley (and very familiar with the challenges facing the banking patch), we do not believe he is well known to investors. This could suggest some initial uncertainty, but we would remind investors that Porat was equally unknown to the investor community when she ascended into the CFO role in January 2010. To that end, the operating environment and Morgan Stanley's financial position are in a visibly better position than when Porat was named CFO. In our view, while Porat's departure is a temporary loss for the company, Pruzan is a well-known and seasoned executive within the company with meaningful knowledge of financial institutions and the regulatory framework in which they operate. Our target is $44.

- Jim Cramer and Jack Mohr, 'Weekly Roundup' originally published 3/27/2015 on ActionAlertsPLUS.com

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Separately, TheStreet Ratings team rates MORGAN STANLEY as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate MORGAN STANLEY (MS) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: MS Ratings Report