Mendoza School of Business

Ex-Morgan Stanley boss starts firm here

Published: May 27, 2006 / Author: Gregory Cresci

Philip Purcell, forced out almost a year ago as chief executive officer of Morgan Stanley,has set up shop in Chicago to invest his own money in stakes of small financial-services companies.

Purcell, 62, and former Merrill Lynch & Co. investment banker W. Eric Carlborg, 42, started Continental Investors LLC, according to Richard Sorensen, a spokesman for Purcell. They’ll share office space with two of Purcell’s seven sons, who run a hedge fund. Continental has no plans to raise money from outside investors, Sorensen said.

“Phil will be spending a substantial amount of time on this venture but will also leave time for other pursuits including non-profit work,” Sorensen said.

The decision ends 11 months of limbo for Purcell, who resigned in June after losing a battle with former Morgan Stanley executives unhappy with the firm’s leadership and stock performance.

Purcell walked away with about $44 million in cash, in addition to almost $200 million in salary, bonuses and stock-based compensation he received during eight years running the New York-based company, Wall Street’s third-largest firm.

Purcell spent much of the past year with his family, Sorensen said. He visited his home in Park City, Utah, vacationed in Europe and devoted more time to the board of trustees at University of Notre Dame, where he earned his undergraduate degree in 1964.

Continental plans to invest mostly in financial companies with a focus on the Internet, Sorensen said. He declined to be more specific and said Purcell wouldn’t comment.

Purcell’s son David was a classmate of Carlborg’s at the University of Chicago Business School. Since 1999, David Purcell, 41, has run a hedge fund specializing in financial services and health care with his younger brother Paul, Sorensen said.

Carlborg joined New York-based Merrill Lynch in 1989 after two years in the commercial-lending department of Harris Trust and Savings Bank. He left Merrill in 1995 to join Boston Chicken Inc. Carlborg worked as chief financial officer for two other companies, then rejoined Merrill in the investment-banking department, where he worked from 2001 to 2004.

When announcing his resignation from Morgan Stanley in June, Purcell said in a statement that leaving the firm was “the best thing I can do.”

Under Purcell, Morgan Stanley shares fell 28 percent during the five-year period that ended March 3, 2005, the day eight of the firm’s former managers wrote its board to demand new leadership.



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