Morgan Stanley Executive Financial Services (EFS) is a specialized, dedicated team of professionals focused on meeting the needs of corporate executives and holders of concentrated stock positions. EFS leverages Morgan Stanley’s experience, knowledge, specialized skills and global resources to provide you with wealth management services.
The benefits of working with our dedicated EFS team include:
- Compliance: EFS professionals can help you comply with the Securities and Exchange Commission (SEC) rules and regulations that affect your stockholdings.
- Access: Working in partnership with your Morgan Stanley Financial Advisor, the EFS team delivers comprehensive and customized solutions to executives, board members and key insiders looking to access the value in their equity in compliance with SEC regulations and corporate insider trading rules. We’ve been the market leader in Rule 10b5-1 & 144 services1 for more than a decade.
- Customization: EFS works with your Financial Advisor to structure, draft and execute diversification strategies tailored to your specific risk management, investment and liquidity objectives
1 Reprinted with the permission of Washington Service. 301-913-5100 — www.washingtonservice.com. The Washington Service tracks insider trade information filed with the Securities & Exchange Commission. The above data is compiled by the Washington Service from Form 144 filings in the period from 2/1/2005 to 12/31/2017 (10b5-1 market data) and from 1/1/2005 to 12/31/2017 (Rule 144 market data). Data from the period 1/1/2005 to 5/31/2009 reflects the formerly separate businesses of the Global Wealth Management Group of Morgan Stanley & Co. LLC and the Smith Barney division of Citigroup Global Markets Inc. that now form Morgan Stanley Smith Barney LLC. This data also includes transactions from Morgan Stanley & Co. LLC. Information contained herein was obtained from sources believed reliable but the accuracy and completeness thereof cannot be guaranteed. Information contained herein is subject to change.
1 Reprinted with the permission of Washington Service. 301-913-5100 – www.washingtonservice.com. The Washington Service tracks insider trade information filed with the Securities & Exchange Commission. The above data is compiled by the Washington Service from Form 144 filings in the period from 2/1/2005 to 12/31/2017 (10b5-1 market data) and from 1/1/2005 to 12/31/2017 (Rule 144 market data). Data from the period 1/1/2005 to 5/31/2009 reflects the formerly separate businesses of the Global Wealth Management Group of Morgan Stanley & Co. LLC and the Smith Barney division of Citigroup Global Markets Inc. that now form Morgan Stanley Smith Barney LLC. This data also includes transactions from Morgan Stanley & Co. LLC. Information contained herein was obtained from sources believed reliable but the accuracy and completeness thereof cannot be guaranteed. Information contained herein is subject to change.
Learn more about the products and services EFS has to offer.
Products & Services
We understand the regulatory challenges you face as an executive and key insider when trying to access the assets in your corporate equity compensation plan. The experienced professionals on our Executive Financial Services (EFS) team can partner with your Morgan Stanley Financial Advisor to deliver specialized guidance and tailored solutions for your unique needs and help you navigate complex regulatory issues.
A Commitment to Excellence
Whether you’re part of a company that’s public or considering going public, your Financial Advisor is dedicated to working with you, the EFS team and your corporate counsel to build and manage a customized strategy for your investment and financial objectives.
We have expertise in a variety of programs, strategies and services, including:
- Our 10b5-1 Preset Diversification Program® (PDP)
- The sale of restricted, control and concentrated stocks under SEC Rule 144
(See Restricted and Control Stock Opportunities in this article)
- Securities-based loans secured by eligible restricted and control stock
(See Sophisticated Liquidity Strategies in this article)
- Wealth transfer and gifting strategies
(see Wealth Transfer and Gifting Opportunities in this article)
- The purchase of company stock under Rule 10b-18
(see Providing a Safe Harbor for Purchases in this article)
Restricted and Control Stock Opportunities
As an executive and key contributor to your company’s success, you may be awarded restricted or control stock to acknowledge your performance. These rewards carry certain limitations.
Our EFS team helps you comply with the myriad SEC rules governing restricted and control stock, as well as the conditions specified in your company’s applicable policies and procedures when making open-market sales.
To achieve this, our EFS professionals:
- Perform SEC resale exemption due diligence
- Assemble necessary documentation, such as broker and seller representation letters
- File Rule 144 forms as needed
- Facilitate compliance with Section 16 Officer filing requirements
- Coordinate with a transfer agent (if the transaction involves restricted stock)
Control securities: Control securities are owned by individuals or entities that directly or indirectly control the management of the issuer (typically senior officers, directors and certain large shareholders, often referred to as affiliates). Keep in mind that it’s the security holder’s ability to control the company—and not how the stock was acquired—that determines whether the securities are control securities.
Restricted securities: Restricted securities may be acquired in an unregistered transaction, obtained from a company or an affiliate of the company in a private transaction or received as compensation. If you have restricted stock, there will usually be a corresponding legend stamped on the stock certificate or entered into the transfer agent’s records to indicate that the stock isn’t registered for public sale.
Sophisticated Liquidity Strategies
Morgan Stanley clients with eligible restricted or control stock may not want—or be permitted—to readily sell their securities. But that doesn’t mean these assets must stay idle. If qualified, a loan secured by eligible securities in your brokerage account may be able to put these assets to work.
The EFS team will vet the specific securities involved to confirm their eligibility as collateral for financing. They will then work with your Financial Advisor and a Morgan Stanley Private Banker* to determine the most appropriate products and services for you while helping you navigate regulatory requirements and ensuring proper documentation.
Leveraging Your Wealth
Securities-based loans may help you unlock the value of your portfolio to:
- Purchase real estate or complete home renovations
- Make philanthropic gifts
- Pay education expenses
- Fund tax liabilities
- Provide funds for life events
- Consolidate debt
- Cover unexpected events
*Private Bankers are employees of Morgan Stanley Private Bank, National Association.
Types of loans that eligible securities can secure include:
- Securities-based loans: A flexible loan or line of credit using securities in a Morgan Stanley brokerage account as collateral. A securities-based loan may be a cost-effective financing alternative for qualified applicants.
- Margin loans: A traditional brokerage loan enabling the purchase of additional securities to diversify an investment portfolio. Margin loans may be used to expedite ownership requirements.
- Tailored lending: Tailored loans may use different assets and asset classes as collateral based on an individual’s unique needs.
Borrowing against securities may not be suitable for everyone. You should be aware that there are risks associated with securities-based loans, including possible maintenance calls on short notice, and that market conditions can magnify any potential for loss. For details, please see the important disclosures below.
Wealth Transfer and Gifting Opportunities
Donating restricted or control stock can bring many benefits to you and the charity of your choice, while having an enduring impact on communities and future generations.
You can make contributions to a favored nonprofit organization without tapping cash reserves or liquidating other assets. By donating restricted or control stock, in fact, you can make significantly larger contributions than if you were making donations in cash. That’s because gifts to qualified charities are exempt from gift tax and removed from your estate. Such donations may also qualify for current charitable income tax deductions (Note: They may be subject to liquidity issues for the charity).
Morgan Stanley’s high-touch support team can guide you through the philanthropic giving strategies available for restricted or control stock.
Providing a Safe Harbor for Purchases
SEC Rule 10b-18 provides a safe harbor against claims of market manipulation when you purchase shares of your company’s stock in the open market.
By working with your Morgan Stanley Financial Advisor and our EFS team, you can utilize this rule to:
Coupled with a 10b5-1 Preset Diversification Program, Rule 10b-18 affords you an affirmative defense against insider trading allegations.
10b5-1 Preset Diversification Program Plan
A Smart Solution for a Common Dilemma
Corporate executives frequently come into possession of material non-public information and face quarterly or special blackout periods that restrict market access for trading their company stock. As a result, they’re often left with narrow windows—and, sometimes, unpredictable opportunities—to execute transactions.
Morgan Stanley’s 10b5-1 Preset Diversification Program® (PDP) was specifically designed to address these issues. By adopting a PDP, you gain an affirmative defense against claims of insider trading and can structure a trading schedule that aligns your need for personal liquidity or diversification with your timing requirements (such as the vesting dates for stock options and restricted stock plans). What’s more, our industry-leading platform and separate-desk structure support the affirmative defense that Rule 10b5-1 offers.
Specialized Resources Focused on You
Our team of 10b5-1 PDP specialists works closely with your Financial Advisor to structure, draft and adopt a 10b5-1 trading plan. This process puts diversification on autopilot and provides discipline during market fluctuations—all while supporting you in the pursuit of your investment objectives.
Once adopted, your plan will be executed by our dedicated 10b5-1 PDP trading desk, a team of traders focused solely on 10b5-1 plans. By keeping our specialists and traders separate and distinct from your Financial Advisor and associates, we ensure that EFS will handle your unique needs while providing you immediate open lines of communication to your Financial Advisor.
When you work with our specialized team and set up a 10b5-1 plan, you gain these important advantages:
- An affirmative defense against potential claims of insider trading
- Access to public markets without regard to corporate blackout periods
- Diversification that reduces risks associated with a concentrated equity position
- Filing of required Rule 144 forms on your behalf
- Prompt execution notification to facilitate Section 16 filing requirements
We've been ranked No. 1 10b5-1 for the past 13 years*
Our EFS team has an average of over 10 years of 10b5-1 trading plan experience
We have executed more than 30,000 plans for more than 1,600 issuers.
Our clients include a diverse range of companies whether viewed by market cap, industry sector or stage in the corporate lifecycle.
Morgan Stanley’s experience, service focus and business model has translated into a #1 1 rank for 2005 – 2017 based on total notional value of shares filed on Form 144 pursuant to Rule 10b5-1 trading plans
- Since the adoption of SEC Rule 10b5-1(c) in August of 2000, Morgan Stanley’s 1 proprietary PDP Trading Desk has:
- Monetized over $84.2Bn in sales (1.85Bn + shares) pursuant to Rule 10b5-1
|Value ($Bn)||Total (%)|
|Top 10 Total||245.09||85.34|
1 Reprinted with the permission of Washington Service. 301-913-5100 — www.washingtonservice.com. The Washington Service tracks insider trade information filed with the Securities & Exchange Commission. The above data is compiled by the Washington Service from Form 144 filings in the period from 2/1/2005 to 12/31/2017. Data from the period 2/1/2005 to 5/31/2009 reflects the formerly separate businesses of the Global Wealth Management Group of Morgan Stanley & Co. LLC and the Smith Barney division of Citigroup Global Markets Inc. that now form Morgan Stanley Smith Barney LLC. This data also includes transactions from Morgan Stanley & Co. LLC. Information contained herein was obtained from sources believed reliable but the accuracy and completeness thereof cannot be guaranteed. Information contained herein is subject to change.
Put Your Wealth to Work
If you find that your wealth is disproportionately weighted in company stock or the restrictions placed on the sale of your shares are limiting your personal financial growth, we offer strategic guidance and sophisticated strategies to help you gain greater access to your wealth.
We look forward to answering specific questions you may have about our Executive Financial Services platform. Please reach out to your Morgan Stanley Financial Advisor, who will be glad to walk you through the critical steps to access our specialized guidance and tailored solutions. You also can contact EFS directly at firstname.lastname@example.org
Holding a concentrated portfolio of a limited number of securities, a decline in the value of these investments would cause the portfolio's overall value to decline to a greater degree than that of a less concentrated portfolio.
Diversification does not guarantee a profit or protect against loss in a declining financial market.
This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this material may not be suitable for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.
Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning, charitable giving, philanthropic planning and other legal matters.
Tailored lending is a loan/line of credit product offered by Morgan Stanley Private Bank, National Association, an affiliate of Morgan Stanley Smith Barney LLC. A tailored lending credit facility may be a committed or demand loan/line of credit. All tailored lending loans/lines of credit are subject to the underwriting standards and independent approval of Morgan Stanley Private Bank, National Association. Tailored lending loans/lines of credit may not be available in all locations. Rates, terms and programs are subject to change without notice. Other restrictions may apply. The information contained herein should not be construed as a commitment to lend. Morgan Stanley Private Bank, National Association is a Member FDIC that is primarily regulated by the Office of the Comptroller of the Currency.
Margin loans are investment products offered through Morgan Stanley Smith Barney LLC. Margin loans are securities-based loans, which can be risky, and are not suitable for all investors. To be eligible for a securities-based loan, a client must have a brokerage account at Morgan Stanley Smith Barney LLC that contains eligible securities, which shall serve as collateral for the securities-based loan.
Important Risk Information for Securities-Based Lending: You need to understand that: (1) Sufficient collateral must be maintained to support your loan(s) and to take future advances; (2) You may have to deposit additional cash or eligible securities on short notice; (3) Some or all of your securities may be sold without prior notice in order to maintain account equity at required maintenance levels. You will not be entitled to choose the securities that will be sold. These actions may interrupt your long-term investment strategy and may result in adverse tax consequences or in additional fees being assessed; (4) Morgan Stanley Bank, N.A., Morgan Stanley Private Bank, National Association or Morgan Stanley Smith Barney LLC (collectively referred to as “Morgan Stanley”) reserves the right not to fund any advance request due to insufficient collateral or for any other reason except for any portion of a securities-based loan that is identified as a committed facility; (5) Morgan Stanley reserves the right to increase your collateral maintenance requirements at any time without notice; and (6) Morgan Stanley reserves the right to call securities-based loans at any time and for any reason.
With the exception of a margin loan, the proceeds from securities-based loan products may not be used to purchase, trade or carry margin stock (or securities, with respect to Express CreditLine); repay margin debt that was used to purchase, trade or carry margin stock (or securities, with respect to Express CreditLine); or deposited into a Morgan Stanley Smith Barney LLC or other brokerage account.
To be eligible for a securities-based loan, a client must have a brokerage account at Morgan Stanley Smith Barney LLC that contains eligible securities, which shall serve as collateral for the securities-based loan.
Preset Diversification Program is a registered trademark of Morgan Stanley Smith Barney LLC, protected in the United States and other countries.
© 2018 Morgan Stanley Smith Barney LLC. Member SIPC.
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