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Morgan Stanley’s Fleming Visits Brokers Amid Technology Flaws

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Sept. 5 (Bloomberg) -- Morgan Stanley Smith Barney President Greg Fleming, seeking to avert broker defections, met with financial advisers in the U.S. to discuss disruptions caused by a new technology and operations system.

Fleming assured employees that the brokerage, a joint venture with Citigroup Inc., is working to make improvements, said Jim Wiggins, a spokesman for New York-based Morgan Stanley. Fleming, 49, traveled to Atlanta, Boston, Houston, Los Angeles, Miami, New York and San Francisco to meet with the advisers, according to Wiggins.

Morgan Stanley finished integrating its brokerage unit with Smith Barney in July, an effort that included developing a technology system for all financial advisers. Some brokers complained of a more cumbersome process to enroll new clients and less automation with some distributions, Wiggins said.

“There has been no mass defection threatened, we have not seen any spike in attrition by financial advisers, and we haven’t seen an impact on the business,” Wiggins said. “Wherever we can make changes to cut through some of the problems that exist and make improvements, we’re doing it.”

Morgan Stanley, which owns 51 percent of the brokerage, is in the process of buying an additional 14 percent from Citigroup. Perella Weinberg Partners LP will set the price of the purchase by Sept. 10 as the two banks failed to agree on a value for the venture.

Arbitration Cases

Erwin Shustak, a lawyer who represents brokers in employee-dispute cases, said he received about six inquiries in the past two weeks from Morgan Stanley Smith Barney advisers related to the integration. Brokers who choose to stay with the company still could bring arbitration cases against the firm for damages suffered because of the disruptions, he said.

Wiggins said Morgan Stanley hasn’t faced arbitration cases over the technology changes.

Morgan Stanley brought some advisers onto the new system last year and transitioned Smith Barney brokers in three waves from February through about mid-year, Chief Financial Officer Ruth Porat said in July. Those three waves involved transferring 2 billion documents and 47 million client positions, she said.

“Given the low attrition while going through platform integration, we do view that as a real positive, because human nature is people don’t like change,” Porat said.

Fox Business Network reported Fleming’s meetings earlier today.

To contact the reporter on this story: Michael J. Moore in New York at

To contact the editor responsible for this story: David Scheer at

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