Counterparties: Grimes and misdemeanors
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When Morgan Stanley won the lead role in Facebookâ€™s IPO in February, its lead technology banker Michael Grimes insisted that he be the â€śsingle driverâ€ť of the deal. In exchange, he acknowledged that it would be â€śhis throat to chokeâ€ť if anything went wrong.
In the wake of Facebookâ€™s botched IPO, however, it looks like Grimes doesnâ€™t have to be worried about any retribution from his employer. Fortuneâ€™s Stephen Gandel reports that Morgan Stanley wonâ€™t use its stringent clawback rules â€śto take any disciplinary action against Grimes or any of the bankers involved in the Facebook IPOâ€ť. This despite the fact that Morgan Stanley has been fined $5 million by Massachusetts’s securities regulator for selectively disclosing financial information to research analysts, a tactic Grimes did â€śeverything but make the phone calls himselfâ€ť to execute.
Perhaps Grimes is keeping his pay because he did nothing wrong. Jonathan Weil says the settlement is â€śfarcicalâ€ť, and that Morgan Stanley should have let the case go to a jury: â€śeven viewed in the worst possible light,â€ť he writes, â€śnone of the conduct described by Galvin was an obvious breach of anything.â€ť Weil suspects that â€śthe real crime here seems to be that Facebookâ€™s stock price fell a lot after the company went public in May, which of course isnâ€™t a crime at all.â€ť
Grimes is also keeping his pay because even after the Facebook fiasco, heâ€™s still the biggest rainmaker on the Street. Gandel reports that in the seven months since the Facebook IPO, Morgan Stanley has generated $32 million in fees from 14 technology IPOs; JP Morgan is a distant second, with just 5 deals to its name in the same period. Grimesâ€™s throat was safe all along, it seems. Just so long as he kept on bringing in the deals. — Ben Walsh
And on to todayâ€™s links: