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) — Jul 11, 2013
MORGAN STANLEY (MS, MS-PA, MS-PE, MS-PF, MS-PI, MS-PK, MS-PL, MS-PO, MS-PP, MS-PQ) (CIK 0000895421)
Date: July 11, 2013 · CIK: 0000895421 · Accession: 0000000000-13-037896
AI Filing Summary & Sentiment
Reasoning
Referenced dates: May 20, 2013, May 6, 2013
Letter
July 11 , 2013 Via E -Mail Ruth Porat Executive Vice President and Chief Financial Officer Morgan Stanley 1585 Broadway New York, N Y 10036
Re: Morgan Stanley Form 10 -K for Fiscal Year Ended December 31, 2012 Filed February 2 6, 2013 Form 10 -Q for the Quarterly Period Ended March 31, 201 3 Filed May 7, 2013 File No. 001 -11758
Dear Ms. Porat:
We have reviewed your response letter dated May 20, 2013, 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 providing the request ed 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 disclosures that clearly identifies new or revised disclosures. If you do not belie ve our comments apply to your facts and circumstances , please tell us why in your response.
After reviewing the information you provide in response to these comments, includi ng the draft of your proposed disclosures, we may have additional comments.
Form 10 -K for the Year Ended December 31, 2012
Item 9 – Changes in and Disagreements with Accountants on Accounting and Financial Disclosure, page 290
9A – Controls and Proced ures, page 290
1. We note your responses to comments 2 and 3 of our letter dated May 6, 2013. In light of the multiple significant deficiencies involving multiple accounts and processes, please explain the extent to which you considered whether deficiencies existed in other components of the Committee of Sponsoring Organizations of the Treadway Commission
Ruth Porat Morgan Stanley July 11 , 2013 Page 2
Internal Control Framework ( COSO ), such as the control environment, in formation and communication, risk assessment , and monitoring . To the extent any deficiencies existed in these components, please tell us how you evaluated the severity of these deficiencies along with the existing significant deficiencies and other control deficiencies.
Form 10 -Q for the quarter ended March 31, 2013
Note 11 – Derivative Instruments and Hedging Activities, page 60
2. We note that you presented the disclosures required by paragraphs ASC 210-20-50-3(a) through 50 -3(e) by how the derivative is transacted on pages 61 -62. Given the magnitude of your gross derivative positions and the significant amoun t of netting against those positions, please tell us why you elected not to further disaggregate such disclosures by derivative type, similar to Example 3 within ASC 210 -20-55-22, and similar to types listed in table on page 64.
3. Furthermore, we note that the gross amounts within the tabular presentation disclosed on pages 44 and 61 includes all instruments, irrespective of whether there is a legally enforceable master netting arrangement in place. Given that the scope of the disclosures in ASC 210 -20-50-1(d) are only applicable to certain financial instruments that are offset in accordance with ASC 210 -20-45 and ASC 815 -10-45 and those that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offs et in accordance with either Section 210 -20-45 or Section 815 -10-45, please separately quantify the amount of derivatives included within your tabular disclosure that are not subject to an enforceable master netting arrangement. Additionally, please revis e your disclosure in future filings to describe any common features or counterparties to these types of derivative contracts where you do not have an “enforceable” master netting arrangement, and clarify whether these derivatives are risk managed any diffe rently than the derivatives that are subject to “enforceable” master netting arrangements
4. Furthermore, you indicate in footnote (2) on pages 44 and 61 that amounts offset in the condensed consolidated statements of financial condition relate to master net ting arrangements and collateral arrangements. It is not clear how the description in footnote (2) reconciles with its use on the columns titled Financial Instruments Not Offset in the Condensed Consolidated Statements of Financial Condition on page 44 or Financial Instruments Collateral or Other Cash Collateral on page 61. In future filings please separately quantify the amount related to collateral arrangements or revise your footnotes accordingly.
You may contact Yolanda Trotter at (202) 551 -3472 or me at (202) 551 -3494 with any questions .
Ruth Porat Morgan Stanley July 11 , 2013 Page 3
Sincerely,
/s/ Kevin W. Vaughn
Show Raw Text
July 11 , 2013
Via E -Mail
Ruth Porat
Executive Vice President and Chief Financial Officer
Morgan Stanley
1585 Broadway
New York, N Y 10036
Re: Morgan Stanley
Form 10 -K for Fiscal Year Ended December 31, 2012
Filed February 2 6, 2013
Form 10 -Q for the Quarterly Period Ended March 31, 201 3
Filed May 7, 2013
File No. 001 -11758
Dear Ms. Porat:
We have reviewed your response letter dated May 20, 2013, 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 providing the request ed
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 disclosures that
clearly identifies new or revised disclosures. If you do not belie ve our comments apply to your
facts and circumstances , please tell us why in your response.
After reviewing the information you provide in response to these comments, includi ng
the draft of your proposed disclosures, we may have additional comments.
Form 10 -K for the Year Ended December 31, 2012
Item 9 – Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure, page 290
9A – Controls and Proced ures, page 290
1. We note your responses to comments 2 and 3 of our letter dated May 6, 2013. In light of
the multiple significant deficiencies involving multiple accounts and processes, please
explain the extent to which you considered whether deficiencies existed in other
components of the Committee of Sponsoring Organizations of the Treadway Commission
Ruth Porat
Morgan Stanley
July 11 , 2013
Page 2
Internal Control Framework ( COSO ), such as the control environment, in formation and
communication, risk assessment , and monitoring . To the extent any deficiencies existed
in these components, please tell us how you evaluated the severity of these deficiencies
along with the existing significant deficiencies and other control deficiencies.
Form 10 -Q for the quarter ended March 31, 2013
Note 11 – Derivative Instruments and Hedging Activities, page 60
2. We note that you presented the disclosures required by paragraphs ASC 210-20-50-3(a)
through 50 -3(e) by how the derivative is transacted on pages 61 -62. Given the
magnitude of your gross derivative positions and the significant amoun t of netting against
those positions, please tell us why you elected not to further disaggregate such
disclosures by derivative type, similar to Example 3 within ASC 210 -20-55-22, and
similar to types listed in table on page 64.
3. Furthermore, we note that the gross amounts within the tabular presentation disclosed on
pages 44 and 61 includes all instruments, irrespective of whether there is a legally
enforceable master netting arrangement in place. Given that the scope of the disclosures
in ASC 210 -20-50-1(d) are only applicable to certain financial instruments that are offset
in accordance with ASC 210 -20-45 and ASC 815 -10-45 and those that are subject to an
enforceable master netting arrangement or similar agreement, irrespective of whether
they are offs et in accordance with either Section 210 -20-45 or Section 815 -10-45, please
separately quantify the amount of derivatives included within your tabular disclosure that
are not subject to an enforceable master netting arrangement. Additionally, please revis e
your disclosure in future filings to describe any common features or counterparties to
these types of derivative contracts where you do not have an “enforceable” master netting
arrangement, and clarify whether these derivatives are risk managed any diffe rently than
the derivatives that are subject to “enforceable” master netting arrangements
4. Furthermore, you indicate in footnote (2) on pages 44 and 61 that amounts offset in the
condensed consolidated statements of financial condition relate to master net ting
arrangements and collateral arrangements. It is not clear how the description in footnote
(2) reconciles with its use on the columns titled Financial Instruments Not Offset in the
Condensed Consolidated Statements of Financial Condition on page 44 or Financial
Instruments Collateral or Other Cash Collateral on page 61. In future filings please
separately quantify the amount related to collateral arrangements or revise your footnotes
accordingly.
You may contact Yolanda Trotter at (202) 551 -3472 or me at (202) 551 -3494 with any
questions .
Ruth Porat
Morgan Stanley
July 11 , 2013
Page 3
Sincerely,
/s/ Kevin W. Vaughn
Kevin W. Vaughn
Accounting Branch Chief