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) - Shares of

Morgan Stanley

(MS) - Get Morgan Stanley Report

were falling more than 4% at the open on Tuesday, continuing its downward plunge, despite soothing assurances from its CEO, its largest shareholder and sell-side analysts.

On Monday CEO James Gorman told employees to stay focused on their jobs and clients and to not respond to the "confusion and misinformation" circulating about the company.

Shares of Morgan Stanley have been

plunging on concerns over its credit and derivatives exposures

, even though several analysts have said that the markets' fears were overdone.

The cost to protect against a Morgan Stanley default has been soaring recent weeks, with the five-year CDS shooting up to 565 basis points on Monday. That means investors right now consider the investment bank even less credit worthy than beleaguered

Bank of America

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"In fragile markets, where fear triumphs over common sense, these things are bound to happen. It is easy to try to respond to the rumor of the day, but that is not usually productive." the CEO said in an internal memo obtained by the

Wall Street Journal

. "Instead we should let balanced third parties do their own analysis and let the facts speak," he said, drawing attention to recent reports issued by analysts at Wells Fargo and Credit Suisse.

Matt Burnell at Wells Fargo said in a report on Monday that Morgan Stanley's exposure to French banks, that are vulnerable to a collapse in Greece, was manageable and has been "overly discounted" by the markets.

Credit Suisse analyst Howard Chen noted that both

Goldman Sachs

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and Morgan Stanley have made important changes in improving and overhauling capital, funding and liquidity management over the past three years. "We find no fundamental argument as to why the major brokerage stocks are trading at valuations close to levels reached at the height of the crisis."

Meanwhile, Morgan Stanley's biggest shareholder,

Mitsubishi UFJ Financial Group

, has also made a show of support for the investment bank, saying that it remains committed to its "long-term strategic alliance with Morgan Stanley". The Japanese bank saved Morgan Stanley in the depths of the crisis in 2008 with a $9 billion investment.

-- Written by Shanthi Bharatwaj from New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.