SecProbe.io

July 8, 2011
 Via E-mail

Ruth Porat 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 December 31, 2010  Filed February 28, 2011  Form 10-Q for the Quarterly Period Ended March 31, 2011  Filed May 9, 2011
File No. 001-11758

Dear Ms. Porat:
 We have reviewed your response date d June 9, 2011 and have the following
comments.  In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
 Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advising us when you will provide the requested response.  Where we have requested  changes in future filings, please include a
draft of your proposed disclosure s that clearly identifies new or  revised disclosures.  If
you do not believe our comments apply to your facts and circumstances or do not believe
an amendment is appropriate, please tell us why in your response.
 After reviewing any amendment to your filing and the information you provide in
response to these comments, we may have additional comments.  Form 10-K for Fiscal Year Ended December 31, 2010

 Item 1.  Business

 Institutional Securities

 Commodities, page 4

1. Please address the following regarding your response to prior comment two:

Ruth Porat
Morgan Stanley July 8, 2011 Page 2

 Please confirm that in future filings you will disclose the information you
provided related to your market maki ng activities in va rious types of
commodities and commodity-related assets or instruments, including your revenue streams and the other parties that make markets in the same commodities.

 Tell us in greater detail the nature of  your other energy-re lated activities,
including crude oil, oil products, natura l gas, electric power, emission credits,
coal, liquefied natural gas, and rela ted products.  Specify the ownership
structures for those activities, and quantify the amounts related to these
activities as they are refl ected in your financial st atements by category of
activity.
 Financial Holding Company

 Scope of Permitted Activities, page 9

2. Refer to your response to prior comment th ree and provide proposed disclosure to
be included in your next Form 10-Q.  If true, please confirm that such disclosure
will clearly address the stat us of your interactions w ith the Federal Reserve on
these matters and the specific activities you plan execute in order to conform to
the requirements of the BHC Act including divestment activities.  Please quantify
the impact of such activities, and identify the respective timeframes of any divestitures.  If you believe the impact of such activitie s is not material, disclose
that fact as well as the st atus of your interactions w ith the Federal Reserve.
 Activities Restrictions under the Volcker Rule, page 10

3. Refer to your response to prior comment f our.  Please revise your disclosure in
future filings to address your plans to  dispose of your in-house quantitative
proprietary trading unit, Process Driven  Trading, in 2012 in advance of the
effectiveness of the Volcker Rule, and the impact of this trading unit on your
financial condition, results of  operations, and liquidity for each period presented.
Additionally, if true pl ease revise your disclosure in future filings to state that you
cannot currently identify th e trading desks and other related business units or
other activities that might be within the sc ope of the final regulatory definition of
proprietary trading.  Disclose the extent  to which you are monitoring regulatory
developments related to the Volcker Rule  and confirm in your disclosure that
when the regulations are final, you will be  in a position to complete your review
of your relevant activities and make pl ans to implement compliance with the
Rule.

Ruth Porat
Morgan Stanley July 8, 2011 Page 3
 Item 1A.  Risk Factors, page 23

4. We note from your response to prior co mment five that you are reviewing your
proprietary trading operations , that the regulations implementing the substantive
Volcker Rule provisions have not been pub lished and that you believe you can not
quantify how the Volcker Rule may impact  your business.  However, it is not
clear why you have not disclosed how you define “proprietary trading” or
quantified the revenues genera ted from your proprietary trading business.  Please
include a risk factor in future filings that  does so.  The risk factor should address
the fact that the Volker Rule has not ye t defined proprietary trading and may be
more inclusive or exclusive than your defi nition.  It should also describe the risks
associated with the potentia l elimination of your proprie tary trading business (as
you define it) and businesses that, while falling outside of your definition, may
qualify as proprietary trad ing under the Volcker Rule.

5. We note your response to prior comment si x.  Please expand your risk factor
disclosure in future filings to quantif y your Monoline exposures and quantify the
costs of your hedging program.  Additiona lly, revise Management’s Discussion
and Analysis of Financial Condition and Results of Operations to explain why
your hedging program continues to become  more costly and difficult to effect.

6. We note your response to prior comment seven and we reissue the comment.
Please note, cross referencing the discussi on to other parts of your document that
contain the details that allo w investors to understand the magnitude of the risk and
consequences is not sufficient.
Item 7. Management’s Discussion and Analys is of Financial Condition and Results of
Operations
 Business Segments, page 54

7. Refer to your response to prior comment te n.  Please revise your disclosure in
future filings to clarify the nature of the significant sales restrictions placed on your principal transactions – investments,  and describe the na ture and amount of
such investments.

8. Refer to your response to prior comment te n.  Please tell us what consideration
you gave to including a tabular disclosure  by business or related product type for
your revenues in the Global Wealth Management Group segment similar to the sales and trading revenues by business ta ble disclosed on page 58.  If you have
revenues by business or product type availa ble for this segment, please revise
your disclosure in future filings  to include such information.

Ruth Porat
Morgan Stanley July 8, 2011 Page 4
 Liquidity and Capital Resources

 Global Liquidity Reserve, page 85

9. Refer to your response to prior comment 11.  Please revise your disclosure in
future filings to separately disclose your global liquidity reserve by foreign and domestic Non-bank a nd Bank subsidiaries.
 Item 7A. Quantitative and Qualita tive Disclosures about Market Risk

 Risk Management

 Credit Risk

 Institutional Securities Activities

 Credit Exposure – Corporate Lending

 “Event-Driven” Loans and Lending Commit ments at December 31, 2010 and December
31, 2009, page 109

10. Refer to your response to prior comment 13.  Please clarify whether you intend to
include the discussion from your respons e in future filing disclosures.
Additionally, please revise your disclosure in  future filings to clarify the meaning
of the term, distributions, and state the types of entities to which you sell or
distribute the event-driven loans, includi ng your relationship w ith such entities.
 Item 11.  Executive Compensation

 Definitive Proxy Statement on Schedule 14A

 Compensation Discussion and Analysis, page 23

11. Your references to “performance prioriti es set at the beginn ing of the year,”
“objective performance goals,” and “qua litative priorities” indicate that
performance based compensation is based on the achievement of preset goals.
Please provide draft disclosure to be included in future filings identifying
quantitative and qualitative goals used to  determine performance based awards.
To the extent that goals were set as thre sholds or ranges, this information should
be disclosed.  When discussing perfor mance based awards, you should indicate
the extent to which goals were achieved.  To the extent that there were specific goals for each named executive officer, th e goals should be separately identified.

12. We note your disclosure on pages 23 and 32 that Mr. Gorman’s compensation for
2010 was lower than his 2009 compensation because you did not meet “certain financial priorities” during 2010.  Please tell us what financial priorities were not

Ruth Porat
Morgan Stanley July 8, 2011 Page 5
 met and specifically describe how not meeting the priorities affected Mr.
Gorman’s 2010 compensation.

13. We note your disclosure on page 26 relati ng to target PSUs earned, as determined
by applying the applicable MS ROE and MS TSR Rank multiplier to the target
award.  Please disclose the target awards.
 Item 15.  Exhibits and Financial Statement Schedules

14. We note your response to prior comment 26.  We are not persuaded that the
documents related to the joint ventures are not material contract s.  In particular,
we note the parenthetical qualification in  your response indica ting that the rights
and obligations under the agreements disc losed in your Form 10-K are material.
Please file the documents related to the joint ventures as exhibits to your
upcoming Form 10-Q.
 Exhibit 10.2

15. We note your response to prior comment 27.  Please tell us how you concluded
that the joint venture agreement is the type of agreement contemplated by Item
601(b)(2) of Regulation S-K, as  opposed to Item 601(b)(10).

Form 10-Q for the Quarterly Period Ended March 31, 2011
 Item 1. Financial Statements

 Notes to Condensed Consolidated Financial Statements

 6.  Variable Interest Entities a nd Securitization Activities, page 34

16. You disclose that your involvement with VI Es arises from structuring of credit-
linked notes or other asset -repackaged notes designed to meet the investment
objectives of clients.  Please tell us wh ether your credit-linked notes and other
asset-repackaged notes include re-securi tization transactions , and if so, please
address the following:

 Confirm the amount of re-securitizati on vehicles you consolidate and the
amount you do not consolidate, and provi de us with you accounting analysis
to support whether you consolidate the vehicles.

 Quantify the total assets of your re-s ecuritization vehicles and amount of
securities that were re-securi tized in the periods presented.

 Quantify the impact of these vehicles on your consolidated financial position
and results of operations for all period s presented, including the amount of

Ruth Porat
Morgan Stanley July 8, 2011 Page 6
 interest held in unconsolidated re-secur itization vehicles and total assets and
liabilities in consolidated vehicles.
 Tell us what years you participated  in re-securitization activities.

 Tell us whether your client s are requesting the re-secu ritization, th e types of
parties that request your assistance in  performing the re -securitization, and
discuss their role in the design of the ve hicle and the structure of the securities
to be issued.

 Tell us whether there are situations in which you are doing re-securitizations
for your own liquidity or capital pur poses, and tell us the other parties
involved that have discretion ove r the design of the vehicle.

17. You consolidate certain of your mortgage  and asset-backed securitizations and
collateralized debt obligations, and do not  consolidate certain others since you are
not the primary beneficiary.  You disclo se that you consider servicing and
collateral management decisions as repr esenting the power to  make the most
significant economic decisions in  transactions such as s ecuritizations or collateral
debt obligations.  Please tell us, and expa nd your disclosure in future filings to
address the following:

 The specific key differences resulting in  the non-consolidation of certain of
your securitizations and collateralized de bt obligations.  For example, clarify
whether the key difference is the lack of  power over the vehicles, or the lack
of an obligation to either absorb lo sses or receive benefits that could
potentially be significant and th e nature of the key difference.

 Clarify the roles you maintain or are requi red to maintain for the securitization
vehicles for which you do not consolidate.

 We note that you disclose on page 177 of your Form 10-K that you do not
provide additional support in securitiza tion transactions th rough contractual
facilities, such as liquidity facilities , guarantees or similar derivatives, and
although not obligated, you ge nerally make a market in  the securities issued
by SPEs in these transactions.  Please describe the circumstances where you
have purchased assets or provided othe r forms of liquidity, for securitization
and collateralized debt obligation vehi cles, but were not required to do so.
Specifically, address the business reasons  for such purchases or liquidity,
including whether you were providing prot ection to security investors or your
customers.

 Discuss the reasons certain deals are struct ured to result in your qualifying or
not qualifying as the primary beneficiary.

Ruth Porat
Morgan Stanley July 8, 2011 Page 7
  Identify the parties that drive the structure of the vehicles.

18.  Segment and Geographic Information

 Geographic Information, page 69

18. It appears that you omitted the regional  view of your income (loss) from
continuing operations before income taxes,  net income (loss) applicable to the
company and total assets.  Please confirm that you will include this information in
future filings.
 Item 2. Management’s Discussion and Analys is of Financial Condition and Results of
Operations
 Executive Summary

 Significant Items

 Morgan Stanley Debt, page 80

19. You disclose net revenues reflected negative revenues of $189 million in the
quarter ended March 31, 2011 from the tightening of your credit spreads on
certain long-term and short-term borrowings , primarily structured notes that are
accounted for at fair value.  We also  note you recorded a loss on long-term
borrowings for which the fair value option was elected of $1.266 billion in
Principal Transactions – Trading in  the quarter ended March 31, 2011 as
disclosed on page 27.  Please revise your disclosure in future filings to more clearly describe the underlying reasons for the loss on your long-term borrowings
recorded at fair value that was not due to your own credit quality.
 Business Segments

 Institutional Securities

 Investment Banking, page 84

20. You disclose that Investment banking revenues for the quarter ended March 31,
2011 increased 14% from the comparable  period in 2010, reflecting higher
revenues from equity and fixed income underwriting transactions and higher
advisory fees.  Please revise your disclosu re in future filings  to include tabular
disclosure regarding the vol ume of transactions underlying your underwriting and
advisory fee revenues.  Specifically, c onsider quantifying the volume of equity
offerings and fixed income offerings  for which you received underwriting
revenues, as well as announced and completed mergers, acquisitions and
restructuring transactions for whic h you received advisory revenues.

Ruth Porat
Morgan Stanley July 8, 2011 Page 8
 Item 3.  Quantitative and Qualitative Disclosures about Market Risk

 VaR, page 115

21. You disclose that you use VaR as one of a range of risk management tools and
VaR methodology has various strengths a nd limitations, which include, but are
not limited to use of historical changes in  market risk factors, which may not be
accurate predictors of future market c onditions, and may not fully incorporate the
risk of extreme market events that are outsized relative to observed historical
market behavior or reflec t the historica