Fleming — one of the architects of Merrill Lynch & Co Inc’s sale to Bank of America Corp — will be president of Morgan Stanley Investment Management, which includes the firm’s merchant banking business. He will also be responsible for Morgan Stanley’s global research and will report to incoming Chief Executive James Gorman, the firm said.
Fleming left Bank of America after the deal closed in January and has been working as a senior research scholar at Yale University. He has been portrayed as a key proponent of the sale of Merrill Lynch at the height of last year’s financial crisis despite initial reluctance from then-Merrill CEO John Thain.
In Andrew Ross Sorkin’s book on the financial crisis, “Too Big to Fail,” Fleming was also credited with getting Bank of America to agree to pay Merrill bankers 2008 bonuses up to the same level as in 2007. He also got the bank to agree to an airtight “material adverse change” agreement, meaning that even if Merrill’s businesses continued to deteriorate Bank of America couldn’t easily back out of the deal.
Both elements of the deal proved to be very controversial as public outrage was sparked by news about the bonuses and as figures in subsequent months showed that Merrill’s businesses were in worse shape than had been publicly acknowledged and Bank of America CEO Kenneth Lewis threatened to back out of the deal.
Fleming joined Merrill Lynch in 1992 and from 2003 to 2007 co-headed Merrill Lynch’s markets and banking group. Fleming, a noted rainmaker who focused on financial companies, oversaw Merrill’s investment banking.
He will be joining Morgan Stanley in February. Fleming’s hiring follows a shuffle of executives announced earlier this week when Gorman pegged Morgan Stanley’s chief financial officer and head of investment banking to run its crucial institutional securities unit.
(Reporting by Michael Erman, additional reporting by Martin Howell, editing by Martin Golan)