Morgan Stanley has revealed in a letter addressed to staff that its Head of Prime Brokerage, Ed Keller, is set to leave his role due to health reasons. Keller is due to be replaced by Kim Shaw and Penny Novick, who will assume the roles of global co-head of the division. Exact details of Keller’s health issues were not revealed in the press release, but plans are in place for Keller to take on a new senior advisor role within the company upon his recovery.
Keller is a known veteran of the firm, having joined Morgan Stanley back in 1994, and then moving on to take the business lead for the global prime brokerage in 2009. The move follows the division having triggered a hit of around $911m to Morgan Stanley’s profits due to trades with Archegos Capital Management, a family office that has now collapsed. The bank, however, has stated that this is not connected to the latest news regarding Ed Keller.
Alan Thomas, Gokul Laroia and David Russell, the three global co-heads of institutional equities at Morgan Stanley, said in the internal memo that:
Ed has been as responsible as anyone for the growth of our prime brokerage business and by extension for the return of our equities franchise to prominence.
Penny Novick, who makes up one-half of the co-heads set to replace Keller, worked most recently as Morgan Stanley’s global head of futures and over-the-counter derivatives and clearing, while Kim Shaw has been working as the co-head of Prime Brokerage throughout the Americas. Upon Keller’s planned return to the firm, he will be expected to engage with major clients in his new senior role.
Morgan Stanley’s Prime Brokerage division caters to wealthy clients and hedge funds, working to offer a vast range of services which includes, but it is not limited to, leverage, stock lending, and trade execution. The aforementioned collapse of Archegos back in March of this year shone a light upon the potential risks surrounding the nature of the prime brokerages, as a line of banks alongside Morgan Stanley suffered drastic losses from the blow-up of the company. Archegos famously managed the family wealth of Bill Hwang, a former hedge fund manager himself.
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