App for that

Morgan Stanley email shame begs a tech solution

Morgan Stanley's email shame should bring Silicon Valley and Wall Street closer together. Messages sent by the bank's head of M&A to Allergan look bad now that Morgan Stanley is working for hostile suitor Valeant Pharmaceuticals International. The episode suggests there's a market for a corporate Snapchat.

No technology has dogged investment banks more than email. Research analysts were caught during the dot-com boom having sent damaging missives. Correspondence embarrassed Goldman Sachs in front of the US Congress following the mortgage crisis. Libor fixing and other trading scandals also have been partly exposed by cringe-worthy notes. This latest instance breaks some new ground, though. In their quest for advisory work, bankers routinely preview their advice in pitches to companies on both sides of deals. Emails published by Allergan without permission indicate that Morgan Stanley was doing just that back in May. Rob Kindler, the bank's global head of mergers, told Allergan boss David Pyott that he didn't think the company was "being nearly aggressive enough in going after" Valeant's business model or the shares it was offering in what is now a $54-billion hostile bid.

Morgan Stanley, as of last week, is on Valeant's team. Regardless of how commonplace such marketing patter may be, the publication of the emails is humiliating even for an industry routinely called out for having conflicts of interest. The decision by one company involved in a high-profile takeover battle to disclose the communiques may also make all deal bankers wonder if they're really safe.

In one sense, Morgan Stanley in particular should have known better. It routinely helps take tech companies public and is the top adviser on mergers in the sector so far this year, according to Thomson Reuters data. Its proximity to so many entrepreneurs means there's little excuse for failing to embrace the latest craze: disappearing message services like Snapchat. Billionaire Mark Cuban recently only agreed to answer questions from Breakingviews using one he is backing, Cyber Dust. Investment bankers ought to get behind these apps, too, or even seed one tailored for business needs. Allergan and Morgan Stanley just proved there's demand.