Morgan Soars on Report of Meeting

The board is reportedly gathering this weekend and some see trouble for Purcell, but that's unlikely.
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Shares of

Morgan Stanley

(MWD)

surged late Friday after

CNBC

reported that the big Wall Street investment firm's board would meet Saturday to discuss the fate of chairman and chief executive officer Philip Purcell.

CNBC

did not disclose the source for its report. A Morgan Stanley spokeswoman declined to comment, saying the firm doesn't comment on speculation.

The report of the unscheduled board meeting follows news reports that several Morgan Stanley board members have recently held discussions with several former Morgan Stanley investment bankers who want Purcell ousted.

Shares of Morgan Stanley closed the trading day up $2.18, or 4.6%, at $52.62.

In recent weeks, shares of Morgan Stanley have been extremely volatile as a group of former Morgan Stanley bankers have embarked on an all-out war to get Purcell fired. The "Group of Eight," as the dissidents are known, have taken out full-page newspaper ads in

The Wall Street Journal

and appeared frequently on

CNBC

.

The dissidents, who are loyalists from the old Morgan Stanley, contend Purcell has wrecked the Wall Street firm's franchise. Many of them were not big supporters of the 1997 merger between Purcell's Dean Witter retail brokerage firm and Morgan Stanley's storied investment bank.

Over the past several weeks, a number of top Morgan Stanley traders and investment bankers have left the firm. Others have been driven out by Purcell in an attempt to purge the company of executives he views as being disloyal.

The

CNBC

report led to fevered speculation on Wall Street that the board would fire Purcell. But such an event would appear unlikely because the board recently issued a statement saying it stood behind Purcell.

Fox-Pitt Kelton brokerage analyst David Trone, in a hastily issued research note Friday, says the report of a board meeting, if true, is an indication that the board is giving serious consideration to some of the complaints raised by the dissidents.

He said one possibility would be for the board to ask Purcell to step down as chairman but remain as CEO. The board also could decide to split the firm into two parts, a move demanded by the dissidents.

But Trone said the meeting also could be an attempt by the board to reiterate its support for Purcell.

"Given the criticism that it has not been taking the Purcell issue seriously, perhaps the board is merely going through the motions of due diligence, but will merely come out on Monday with a statement of continued support for Purcell,'' Trone wrote.