Securities and Exchange Commission

Litigation Release No. 18117 / April 28, 2003

   Securities and Exchange Commission v. Morgan Stanley & Co.
   Incorporated, 03 CV 2948 (WHP) (S.D.N.Y.)

   SEC SUES MORGAN STANLEY FOR RESEARCH ANALYST CONFLICTS OF INTEREST
   FIRM TO SETTLE WITH SEC, NASD, NYSE, NY ATTORNEY GENERAL, AND STATE
   REGULATORS

   The Securities and Exchange Commission announced today that it has
   settled charges against Morgan Stanley & Co. Incorporated, a New
   York-based brokerage firm and investment bank, arising from an
   investigation of research analyst conflicts of interest. This
   settlement, and settlements with nine other brokerage firms, are part
   of the global settlement the firms have reached with the Commission,
   NASD, Inc., the New York Stock Exchange, Inc. ("NYSE"), the New York
   Attorney General, and other state regulators. As part of the
   settlement, Morgan Stanley has agreed to pay $25 million as
   disgorgement and an additional $25 million in penalties. One-half of
   the total of these payments - $25 million - will be paid in connection
   with the SEC action and related proceedings by the NASD and NYSE and
   will be placed into a distribution fund for the benefit of customers
   of the firm. The remainder will be paid to resolve related proceedings
   by state regulators. In the SEC action, Morgan Stanley has agreed to a
   federal court order that will enjoin the firm from future violations
   of NASD and NYSE rules and require the firm to make changes in the
   operations of its equity research and investment banking departments.
   In addition, Morgan Stanley will pay, over five years, $75 million to
   provide the firm's clients with independent research.

   In connection with this matter, the Commission today filed a Complaint
   against Morgan Stanley in the U.S. District Court for the Southern
   District of New York, alleging violations of NASD and NYSE rules.
   According to the Commission's Complaint, from at least July 1999
   through June 2001, research analysts at Morgan Stanley were subject to
   inappropriate influence by investment banking at the firm. The
   Complaint also alleges that Morgan Stanley made payments to other
   firms for those firms to publish research on Morgan Stanley's
   underwriting clients without ensuring that such payments were
   disclosed and failed to maintain appropriate supervision over its
   research and investment banking operations.

   Specifically, the Commission's Complaint alleges that
     * Morgan Stanley compensated its research analysts, in part, based
       on the degree to which they helped generate investment banking
       business for the firm. As part of the annual performance