SEC Comment Letter for MORGAN STANLEY (MS, MS-PA, MS-PE, MS-PF, MS-PI, MS-PK, MS-PL, MS-PO, MS-PP, MS-PQ) (CIK 0000895421) (MS) — Jan 3, 2008
MORGAN STANLEY (MS, MS-PA, MS-PE, MS-PF, MS-PI, MS-PK, MS-PL, MS-PO, MS-PP, MS-PQ) (CIK 0000895421)
Date: Jan. 3, 2008 · CIK: 0000895421 · Accession: 0000000000-08-000301
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-11758
Referenced dates: August 30, 2007, November 27, 2007
Letter
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-7010 DIVISION OF CORPORATION FINANCE January 3, 2008 Room 7010 David H. Sidwell Executive Vice President and Chief Financial Officer Morgan Stanley 1585 Broadway New York, NY 10036
Re: Morgan Stanley Form 10-K for Fiscal Year Ended November 30, 2006 Form 10-Q for the Fiscal Quarter Ended February 28, 2007 File No. 001-11758
Dear Mr. Sidwell:
We have reviewed your response letter dated November 27, 2007 and have the following comment. Where indicated, we thi nk you should revise your document. If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. Please be as detailed as necessary in your explanation. In our comment, we may ask you to provide us with information so we may better understand your disclosure. After reviewing this inform ation, we may raise additional comments.
Form 10-K for the year ended November 30, 2006
Note 4. Collateralized and Securi tization Transactions, page 126
1. We have reviewed your response to prior comment 1 in our letter dated August 30, 2007 and appreciate the detailed info rmation you have provided. Please address the following comments with regards to your subprime lending: Please reconcile and explain the di fference between the amount of your subprime residential mortgage loans at August 31, 2007 that is included in your response C to prior comment 1 to the $12.3 billion amount presented in your subprime analysis for 2007 that was included in your response and also included in your Form 8-K filed Novemb er 7, 2007. For example, explain how your trading positions in subprime related securities and derivatives are reflected in this table;
David H. Sidwell Morgan Stanley January 3, 2008 Page 2 For each amount quantified in responses C – K, please reconcile these amounts to amounts in your statement of fina ncial position at August 31, 2007 and provide explanations for any material differences; We note your risk management policies discussed in your response and your disclosure in Item 7A of your Form 10-K for 2006. Please ensure that your Item 7A disclosures in future filings in clude a more detailed discussion of your origination policies, specifically any ch anges in eligibility requirements, and discusses in detail disposition stra tegies and how you monitor your net exposure when evaluating risks associ ated with your trading and other portfolios; We note that your response has not addre ssed the possibility that your subprime lending business will have a material adverse impact on your financial condition, results of operations or liqu idity. We caution you to continue to evaluate, both on a quantitative and qualitat ive basis, the appr opriate amount of transparent disclosures you provide rega rding your subprime lending so that readers are informed about your level of involvement in these activities; and We note in your Form 10-Q for August 31, 2007 you disclose in MD&A that the US economy was experiencing signs of slowing during the third quarter 2007, primarily reflecting difficult conditions in the residential real estate and credit markets and that concerns about the impact of subprime loans caused the broader credit markets to deteriorate considerable over th e course of the quarter. In light of the economic slowi ng in the residentia l real estate and credit markets and your impairment of trad ing portfolio that included real estate securities, tell us how you de termined that there were no decreases in fair value of your US subprime related balance sh eet exposures during the third quarter 2007; Please provide us with a comprehensive an alysis as to how Saxon Capital, Inc. may impact your company. Tell us what disclosures you intend to include in future filings in this regard. If material, you should consider discu ssing your revenues from involvement in subprime loans and any expected impact due to the current market conditions.
Further, we urge you to carefully consider how your current involvement with subprime loans may impact your companies, financial position, results of operations and liquidity. The impacts considered should encompass, w hole loan exposures, trading investments, derivatives, available for sale securities, inve stment in, and by, subsidiaries and any and all exposures to off-balance sheet entities and unrelated entities. Y our disclosures should be presented in such a way that readers can fully understand the scope or your direct and indirect involvement, and potential expos ures you have regarding such loans and financial instruments.
David H. Sidwell Morgan Stanley January 3, 2008 Page 3
You may contact Melissa Rocha at ( 202) 551-3854 or me at (202) 551-3689 if you have questions regarding comments on the financial statements and related matters.
Sincerely, John Hartz Senior Assistant Chief Accountant
Show Raw Text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE
January 3, 2008 Room 7010 David H. Sidwell Executive Vice President and Chief Financial Officer Morgan Stanley 1585 Broadway New York, NY 10036
Re: Morgan Stanley
Form 10-K for Fiscal Year Ended November 30, 2006
Form 10-Q for the Fiscal Quarter Ended February 28, 2007
File No. 001-11758
Dear Mr. Sidwell:
We have reviewed your response letter dated November 27, 2007 and have the
following comment. Where indicated, we thi nk you should revise your document. If you
disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. Please be as detailed as necessary in your explanation. In our
comment, we may ask you to provide us with information so we may better understand
your disclosure. After reviewing this inform ation, we may raise additional comments.
Form 10-K for the year ended November 30, 2006
Note 4. Collateralized and Securi tization Transactions, page 126
1. We have reviewed your response to prior comment 1 in our letter dated August
30, 2007 and appreciate the detailed info rmation you have provided. Please
address the following comments with regards to your subprime lending:
Please reconcile and explain the di fference between the amount of your
subprime residential mortgage loans at August 31, 2007 that is included in your
response C to prior comment 1 to the $12.3 billion amount presented in your
subprime analysis for 2007 that was included in your response and also
included in your Form 8-K filed Novemb er 7, 2007. For example, explain how
your trading positions in subprime related securities and derivatives are reflected in this table;
David H. Sidwell
Morgan Stanley
January 3, 2008 Page 2
For each amount quantified in responses C – K, please reconcile these amounts
to amounts in your statement of fina ncial position at August 31, 2007 and
provide explanations for any material differences;
We note your risk management policies discussed in your response and your
disclosure in Item 7A of your Form 10-K for 2006. Please ensure that your
Item 7A disclosures in future filings in clude a more detailed discussion of your
origination policies, specifically any ch anges in eligibility requirements, and
discusses in detail disposition stra tegies and how you monitor your net
exposure when evaluating risks associ ated with your trading and other
portfolios;
We note that your response has not addre ssed the possibility that your subprime
lending business will have a material adverse impact on your financial condition, results of operations or liqu idity. We caution you to continue to
evaluate, both on a quantitative and qualitat ive basis, the appr opriate amount of
transparent disclosures you provide rega rding your subprime lending so that
readers are informed about your level of involvement in these activities; and
We note in your Form 10-Q for August 31, 2007 you disclose in MD&A that
the US economy was experiencing signs of slowing during the third quarter
2007, primarily reflecting difficult conditions in the residential real estate and
credit markets and that concerns about the impact of subprime loans caused the
broader credit markets to deteriorate considerable over th e course of the
quarter. In light of the economic slowi ng in the residentia l real estate and
credit markets and your impairment of trad ing portfolio that included real estate
securities, tell us how you de termined that there were no decreases in fair value
of your US subprime related balance sh eet exposures during the third quarter
2007;
Please provide us with a comprehensive an alysis as to how Saxon Capital, Inc.
may impact your company. Tell us what disclosures you intend to include in future filings in this regard.
If material, you should consider discu ssing your revenues from involvement in
subprime loans and any expected impact due to the current market conditions.
Further, we urge you to carefully consider how your current involvement with subprime
loans may impact your companies, financial position, results of operations and liquidity.
The impacts considered should encompass, w hole loan exposures, trading investments,
derivatives, available for sale securities, inve stment in, and by, subsidiaries and any and
all exposures to off-balance sheet entities and unrelated entities. Y our disclosures should
be presented in such a way that readers can fully understand the scope or your direct and
indirect involvement, and potential expos ures you have regarding such loans and
financial instruments.
David H. Sidwell
Morgan Stanley January 3, 2008 Page 3
You may contact Melissa Rocha at ( 202) 551-3854 or me at (202) 551-3689 if
you have questions regarding comments on the financial statements and related matters.
Sincerely, John Hartz Senior Assistant Chief Accountant