Morgan Stanley exec tainted by trade losses quits

By Joseph A. Giannone

NEW YORK, March 11 (Reuters) - High-ranking Morgan Stanley (MS.N) bond and commodities trader Neal Shear has left the bank, according to an internal e-mail, three months after he was demoted for his oversight of a mortgage trading business that generated billions of losses last year.

The memo, distributed on Feb. 28, says Shear was quitting as chairman of Morgan's industry-leading global commodities business. Spokesman Mark Lake confirmed the contents of the e-mail, sent by global commodities head John Shapiro. Lake declined further comment.

Shear, 53, was named chairman in December. That move was one of many sweeping changes in Morgan's institutional securities division after the bank suffered billions of dollars of mortgage trading losses that led to the ouster of co-President Zoe Cruz and other senior fixed-income executives.

As chairman, no employees reported to Shear. The 26-year veteran meanwhile was now reporting to Shapiro, a long-time deputy who had taken over as head of commodities. The chairman job is not expected to be replaced.

"He has been my valued partner for more than two decades and his council on matters strategic to the department will be missed," Shapiro wrote in his e-mail to Morgan's commodities group.

Shear, who joined Morgan as head of precious metals trading, helped build Morgan's energy and metals trading businesses into one of the largest on Wall Street over more than two decades and a significant money maker for the world's second-largest investment bank.

Based on that success, Shear was promoted by Cruz in 2005 to become head of all fixed-income trading, which includes bonds, mortgages, currencies and commodities. Last year Shapiro moved up again, heading securities trading while Jerker Johansson -- who recently left to become chief executive of UBS Investment Bank -- had run securities sales.

Shear's climb up the ladder was interrupted last fall, when the bond trading division's bets on mortgage-related securities swung from big gains to disastrous losses. The poorly managed trade led to a fourth-quarter write down of $7.8 billion.

Shapiro in the e-mail said he now reports to Walid Chammah, co-President of Morgan Stanley since December. (Editing by Tim Dobbyn)