Morgan Stanley has held talks to sell up to a 49-percent stake to China’s sovereign wealth fund, China Investment Corp., which already owns a 9.9-percent stake in the firm, the Financial Times reported Thursday. But CIC is worried about government opposition to such an investment and has played down the talks, saying Morgan doesn’t need any help. In the meantime, Morgan is reportedly in advanced talks with Wachovia about a merger. The advanced talks come as “some hedge funds have pulled their business and other clients have reduced trading with the firm,” the New York Times’ Dealbook reports.
Earlier this week, JPMorgan CEO Jamie Dimon threatened to fire any JPMorgan brokers caught trying to pick off Morgan Stanley and Goldman Sachs clients and employees, according to the Wall Street Journal. Dimon also told his brokers to stop telling their clients that their assets are not safe at Morgan Stanley. Dimon made the call after a conversation with Morgan Stanley CEO John Mack, who complained after he heard that JPMorgan brokers were doing just that.
To help ease some pressure on financial services stocks like Morgan Stanley and Goldman, regulators passed a temporary short-selling ban on Friday. The U.S. government was also planning a large-scale intervention in financial markets to prevent further meltdowns, according to news reports.