Andrew Garvey, former head of Morgan Stanley’s tax-exempt securities department, left the firm on Friday, the company has confirmed.
Phil Newcomb, co-head globally of the interest rates and currencies division, will serve as interim head of the tax-exempts group, according to an internal memo obtained by The Bond Buyer. The firm declined to say whether it had developed any plans for a permanent replacement.
Garvey said he had no comment and referred questions to Morgan Stanley. The firm declined to provide details about his exit.
Newcomb and Roberto Hoornweg, the other co-head of Morgan Stanley’s interest rates and currencies division, circulated the memo announcing Garvey’s departure on Friday. Morgan Stanley’s tax-exempts group is part of its larger interest rates and currencies division, and Garvey reported to Newcomb as part of his former job.
Market sources said they were surprised to hear the news and that it seemed abrupt to see Garvey gone on such short notice.
“I thought Andrew was on the inside,” said one market source who commented on the condition of anonymity. “Their league tables are still pretty good, and I think they made a bunch of money last year.”
During the last 10 years, Morgan Stanley has ranked as high as fourth and as low as eighth among the country’s busiest underwriters of municipal bonds, according to Thomson Financial. The company finished seventh in 2006, senior managing 250 deals worth a combined $19.6 billion.
Through the end of last week, Morgan Stanley ranked eighth for 2007. The bank has run the books on 78 deals worth a combined $7.8 billion so far this year, Thomson data shows.
Morgan Stanley is the third major municipal bond underwriting firm to reshuffle its management during the past year. However, the other two firms — JPMorgan and UBS Securities LLC — both had succession plans in place when the former head stepped down from the top spot.
Garvey has developed a reputation as one of the better marketers in the muni bonds industry.
“I think his strength is marketing,” William O’Keefe said when Garvey was hired in March 1999. O’Keefe ran Morgan Stanley’s tax-exempt securities department when the firm hired Garvey from Lehman Brothers. “If you thought you were at full market potential you would not hire an Andrew Garvey.”
Garvey joined Morgan Stanley to help lead the firm’s municipal derivatives group — similar to the job he had been doing for about seven years at Lehman. It was seen at the time as a coup for Morgan Stanley, which was trying aggressively to build its muni derivatives profile.
After working to beef up this side of Morgan Stanley’s tax-exempts business, Garvey was head of the firm’s public finance efforts for about three years starting in 2002. He succeeded O’Keefe in March 2005 when the industry veteran retired from the muni bond market.
