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FrontPoint Partners restructures relationship with Morgan Stanley - bank will retain minority stake in firm

Wednesday, October 20, 2010
Opalesque Industry Update - FrontPoint Partners LLC (“FrontPoint”), which was acquired in 2006 by Morgan Stanley (NYSE: MS), today announced a restructuring of its relationship with Morgan Stanley whereby FrontPoint portfolio managers and senior management, including Co‐Chief Executive Officers Daniel Waters and Michael Kelly, will collectively own a majority of the equity ownership interests in FrontPoint.

Under the terms of the agreement, Morgan Stanley Investment Management (“MSIM”) will retain a minority equity stake in FrontPoint. No other terms were disclosed. The restructuring is subject to customary closing conditions, and is expected to close in the fourth quarter of 2010.

“During the last four years we have continued to expand our investment capabilities, assets under management and investor base,” said Mr. Waters. “We have worked very closely with MSIM’s senior management on restructuring the FrontPoint relationship with Morgan Stanley to ensure that FrontPoint is best positioned to continue to deliver returns for our investors.”

Added Mr. Kelly, “As we enter our second decade, FrontPoint will remain focused on delivering absolute returns with wide‐ranging and attractive investment opportunities for our investors. We will continue to add investment teams that complement our existing strategies.”

FrontPoint Senior Portfolio Manager Steven Eisman commented, “I am especially pleased that my fellow portfolio managers support the restructuring of our relationship with Morgan Stanley, and that the FrontPoint investment culture will not change.”

(press release)

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