Morgan Stanley’s double-standard

May 16, 2007, 10:14 PM UTC
Fortune

A couple weeks ago I posted an item in praise of two-tier stock ownership. An astute reader suggested to me a double standard at Morgan Stanley (MS) that frankly hadn’t occurred to me.

The whole brouhaha over dual classes of stock began when a Morgan Stanley fund manager, Hassan Elmasry, began complaining about the Sulzberger’s control of The New York Times Co. (NYT) through its super-voting shares of the company’s stock. Elmasry, of course, has taken a bath with a bad bet on the newspaper industry, so he’s on a corporate governance crusade against how the company in which he has invested is controlled.

My astute reader wonders how the investment bankers at Morgan Stanley feel about two-tiered ownership considering their prominent lead role in the 2004 IPO of Google (GOOG), whose founders famously defended their decision to retain voting control of the company. My guess is that if a big banking client requested 17 classes of stock the bankers would gladly support the request — and collect their fee. I’d also guess the investment bankers want nothing to do with Elmasry and find his rabble-rousing to be an annoyance, to say the least.

As I’ve written, I see nothing wrong with two-tiered stock. In theory, there ought to be a discount attached to it because the sellers aren’t truly giving up control. They’re offering an opportunity for investors to participate, but under terms of the sellers’ choosing. So long as it’s all disclosed, seems like caveat emptor applies.

Thanks astute reader!

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