Wealth-management boss and EMEA head named joint number two to CEO Mack. James Gorman has been made co-president of Morgan Stanley less than two years after joining the wirehouse as head of retail brokerage from Wall Street rival Merrill Lynch. The move is part of management shift at Morgan Stanley, announced late yesterday, that sees Gorman and Walid Chammah -- head of the firm's operation in Europe, the Middle East and Africa -- replace Zoe Cruz and Robert Scully as co-presidents.

"Walid and James are the right team with the right skills to lead Morgan Stanley now and to drive the Firm forward to a new level of success," says Morgan Stanley's chairman and CEO John Mack. "They are both exceptional leaders with a proven ability across many years to assemble and lead strong teams and build successful, profitable businesses."

Time for change

Mack adds that though Morgan Stanley is well positioned "to take advantage of the strong foundation we've put in place in recent years," market upheavals -- read: the credit debacle -- call for "a leadership team that is ideally suited to help Morgan Stanley realize the opportunities ahead."

Cruz, who joined Morgan Stanley in 1982 and became co-president in 2005, is leaving the firm altogether. Scully, who became co-president in 2006, will join a newly created "office of the chairman" to focus on the firm's key clients, especially "global sovereign investors," according to a Morgan Stanley press release.

Gorman joined Morgan Stanley as president and COO of the firm's wealth-management business in February 2006, initially as a report to Cruz. Last month he was given an additional role as co-head of strategic planning along with CFO Colm Kelleher. As co-president of the firm he will continue in his previous roles; so will Chammah.

Gorman's hire in 2006 followed hard on a period of infighting at Morgan Stanley that saw a number of high-level departures, including that of CEO Philip Purcell. Mack, a runner-up to Purcell for the top spot a few years ago, got the nod from the Morgan Stanley's board of directors in mid 2005.

Huddled MBAs

Gorman, who joined Merrill from the consulting firm McKinsey in 1999, headed the firm's private-client business from 2001 through June 2005, when he became head of corporate acquisitions at Merrill, a new position. His erstwhile boss Robert McCann took over Gorman's job as head of Merrill's wealth-management operations.

In other changes at Morgan Stanley, Michael Petrick has been detailed to oversee the firm's equity trading business and serve as co-head of institutional securities sales and trading, alongside Jerker Johansson, and Norman Shear has been named chairman of the firm's commodity business.

Fun fact: New York-based Morgan Stanley counts an unusual number of top managers who hail from places other than the U.S. London-based Chammah was born in Lebanon, Gorman comes from Australia and Johansson is a Swede.

Morgan Stanley had $739 billion in assets under management at the end of August 2007. Its wealth-management business accounted for about 21% of its $8 trillion in third-quarter 2007 net revenue. The company has around 600 offices in 32 countries. -FWR

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