Morgan Stanley shares had their biggest two-day rally in three months on mounting speculation that former company president John Mack will be brought back to replace chief executive officer Philip Purcell.
The world's biggest securities firm is in talks with Mack, 60, and an announcement is possible as early as next week, the Wall Street Journal reported on Friday. Morgan Stanley shares rose US$1.40 to US$53.12 on Friday in New York Stock Exchange composite trading, bringing their two-day gain to 5.2 percent.
Mack is preferred by some shareholders because, after spending 29 years at the firm, he already knows many of its senior managers and may stand the best chance of rebuilding its morale quickly.
Purcell, 61, said June 13 that he would step down as chairman and CEO after investors and former executives waged a two-month campaign to oust him.
"If they did hire Mack, it would be fine," said Jim Schmidt, who helps manage US$5 billion at John Hancock Funds in Boston.
"The Street would like him. Just getting the decision out of the way would be positive," he said.
The firm has lost at least 55 executives, bankers and traders since March 28, when Purcell made Zoe Cruz, 50, and Stephen Crawford, 41, his co-presidents. Five members of the firm's management committee -- Stephan Newhouse, Vikram Pandit, John Havens, Terry Meguid and Joseph Perella -- quit after the shakeup, depleting Morgan Stanley's bench of potential CEOs.
On Thursday, Morgan Stanley investors who together own almost 10 million shares, or 1 percent of the stock, said they would back a plan to make Mack chief executive.
They also said Morgan Stanley should consider other candidates, including Robert Rubin, the 66-year-old former Goldman Sachs Group Inc co-chairman who's now head of Citigroup's executive committee, and BlackRock Inc chairman and CEO Laurence Fink, 52, they said.
The Wall Street Journal, in the report on its Web site on Friday, said it isn't clear whether Morgan Stanley has stopped talking to other potential CEOs.
Morgan Stanley spokesman Mark Lake declined to comment. The Journal said Mack was traveling and couldn't be reached. Charles Knight, the Morgan Stanley board member who's heading the CEO search, and lead director Miles Marsh did not return calls seeking comment.
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