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To: Jan Crawley who wrote (26081)	11/15/1998 9:07:00 PM
From: H James Morris	Read Replies (1) \| Respond to of 164684

Jan<$135 or $110? for next week.> If Uncle Al cuts, $135 or <. If not $115 or>.

To: Jan Crawley who wrote (26081)	11/15/1998 9:58:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

I am becoming more impressed by the ethics I am finding in the way Morgan Stanley does business: "Article 8 of 200 SFC reprimands Morgan Stanley ENOCH YIU 06/03/98 South China Morning Post Page 1 (Copyright 1998) Multinational blue-chip investment bank Morgan Stanley Asia and the Securities and Futures Commission were locked in a war of words yesterday after the SFC severely reprimanded the bank for misconduct. A year-long SFC investigation concluded Morgan Stanley had "failed to meet the requirement as a registered investment adviser" during a fund-raising exercise by China Everbright IHD-Pacific in May last year. In response, the bank fired a broadside at the commission, saying it had not broken any rules and that the SFC was imposing laws retroactively. In a tit-for-tat exchange, the SFC swiftly released another statement saying if it had known Morgan Stanley was going to make a public statement, it would have revealed more details from its investigation. In response to that statement, the company at the centre of the storm - China Everbright Ltd, formerly known as China Everbright IHD-Pacific - said it wanted nothing to do with the squabble. The row centres on Morgan Stanley 's role in putting a deal together that allowed China Everbright IHD-Pacific to raise $1.9 billion via a share placement. The deal progressed, but no details of how the proceeds were to be used were revealed, with the bank and China Everbright saying the funds were for general working capital. The lack of information about the proceeds prompted the SFC to block the fund-raising exercise until more details could be given. It subsequently emerged China Everbright IHD-Pacific planned to use the proceeds to buy a 20 per cent stake in Everbright Bank of China for $1.9 billion plus $500 million from internal resources. The SFC said Morgan Stanley knew China Everbright IHD-Pacific had sought regulatory approval to buy the stake when it put the deal together and should have informed investors. As a result, the commission said Morgan Stanley "did not fulfil its regulatory responsibility to ensure that the public was told this information". " Morgan Stanley Asia's failure amounted to misconduct and impugned its fitness and properness to be registered," it said. "The commission expects very high standards of financial advisers . . . and Morgan Stanley Asia failed to adhere to those standards." The US bank reacted swiftly. " Morgan Stanley Asia is of the view that it did not violate any regulatory guidelines," the firm's spokesman said. " Morgan Stanley Asia advised its client to make the most conservative disclosure in light of the facts that, contrary to the SFC's statement in its press release, Morgan Stanley Asia had no expectations whatsoever that regulatory approvals would be granted shortly in China. "We stand by our advice to our client and believe that our fitness and properness to act as a financial adviser has in no way been impugned." The regulator hastily replied: "The commission regrets Morgan Stanley Asia's attempt at public exoneration was made without reference to the commission's written decision which . . . fully discussed the evidence gathered by the SFC." The SFC said Morgan Stanley Asia knew what was required of it as a registered investment adviser and failed to meet the requirements. China Everbright Ltd tried to distance itself from the fracas. "We closely followed the advice given by Morgan Stanley , our financial adviser, during the whole process," one senior China Everbright source said. "What happened today is between SFC and Morgan Stanley . It has nothing to do with us as a client of an investment bank." "