Brokers, branch managers and directors in Citigroup's former Smith Barney retail brokerage unit have spent the past year learning to live under new management. While that's typical when companies get taken over (think of the sometimes tumultuous integration of BofA Merrill Lynch), in this case some of the affected parties might have been caught unawares due to the initial labeling of Morgan Stanley Smith Barney as a "joint venture."
"To me, it is crystal clear that this 'JV' (as it is referred to internally) is really a takeover," writes headhunter Danny Sarch in Investment News. "There is no new culture; there is absorption of Smith Barney into Morgan Stanley."
After detailing numerous MSSB policies and policy makers installed by 51 percent owner Morgan Stanley, Sarch continues:
Legacy Smith Barney managers also have it tougher when it comes to recruiting because the new technology platform of the combined firm, to be launched the second half of 2011, will be a Morgan Stanley based platform. Smith Barney advisors are the ones who will have to learn a whole new system and move their clients over. So, if you are recruited into a Smith Barney branch between now and then, you will have to learn the Smith Barney system first, and the Morgan Stanley system in 2011.
It's hardly news that any venture's 51 percent shareholder calls all the shots. (Remember your first pop-quiz question from Corporate Governance 101: How many members of a 12-member board of directors does a holder of 51 percent of a corporation's shares get to appoint? Twelve, of course.) Still, it's useful to see all the implications spelled out in detail for the case of Morgan Stanley Smith Barney, the nation's biggest employer of financial advisors.
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