Blue Blood & Mutiny: The Fight for the Soul of Morgan Stanley

The inside story of the power struggle that rocked Wall Street’s most prestigious financial institution

What began with a shot over the bow ended in a shocking coup d’etat. In less than four months a group of eight retired executives orchestrated a stunning revolt within Morgan Stanley, the venerable and—until recently—most successful financial products and services firm on Wall Street. Now acclaimed journalist and historian Patricia Beard brings together all the at the back of-the-scenes story in Blue Blood and Mutiny, a real-life business thriller exposing the tale that shook high finance.

In March 2005 the business world woke up to an unprecedented full-page ad in the Wall Street Journal calling for the removal of Morgan Stanley’s CEO. It used to be paid for by a cohort of eight former Morgan Stanley executives, including an ex-chairman and an ex-president, who soon would be dubbed the “Eight Grumpy Old Men.” Their target used to be CEO Philip Purcell, a midwesterner who had come to power following Morgan Stanley’s 1997 merger with Dean Witter Discover, where Purcell had been chief executive. In his eight years as CEO, Purcell had presided over a 50 percent decline in stock price since its peak in 2000 and a series of high-profile government and civil lawsuits that had tarnished the company’s once-sterling reputation. Only a few months after the Journal ad, Purcell would retire under pressure, and former president John Mack, who had been pushed out by Purcell, used to be appointed CEO. The “Eight Grumpy Old Men” won the battle.

The revolt of the Eight is about more than the stock price, or any bottom-line metrics: it signals a clash of cultures and a battle for the soul of American business. Since its founding, Morgan Stanley has been an elite enterprise guided by J. P. Morgan Jr.’s motto “A First Class Business in a First Class Way.” The House of Morgan stood for something larger than success with honor; its ethos used to be unique—some would say sacred—and the eight retired executives believed this ideal had been undermined all the way through Purcell’s reign.

Opening the long-closed doors of a bastion of Wall Street that has maintained the strictest privacy until now, Blue Blood and Mutiny weaves the history of Morgan Stanley with the inside story of the fight for dominance between two competing business cultures—one, the collegial meritocracy handed down from the days of J. P. Morgan, and the other, a cold, recent corporate model. Here is the season’s should-read book for anyone who wants to be aware the way forward for American business.