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Mack takes over at Morgan Stanley, vows to pursue departed talent

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NEW YORK (AP) _ John Mack was met with a standing ovation as he walked onto Morgan Stanley's trading floor after being named the Wall Street firm's new chairman and chief executive.

Mack returned to the storied investment bank Thursday, bringing the stability of a Wall Street veteran to an embattled firm and promising to seek the return of top employees who left the company under former chairman and chief executive Phil Purcell.

The company's board voted unanimously to name Mack the company's chairman and CEO, a long-rumored appointment thought to appeal to the company's investment bankers and promote internal unity.

The company said Mack will take over immediately from Purcell, who announced his retirement June 13 under pressure from investors and his own board over his leadership style and management of the company.

In an interview with The Associated Press, Mack said he would reach out to employees who left during Purcell's watch.

Five of the 14 members of Morgan Stanley's executive committee _ including veteran mergers-and-acquisitions star Joseph Perella _ left in late March and early April, many expressing frustration with perceived favoritism from Purcell.

``I would like to have them come back, along with others,'' Mack said. ``There are some talented people out there who have left Morgan Stanley, not just those five executives. We need more talented people.''

Mack added that he had been in touch with Perella and other executives, and was in negotiations to try to bring them back.

Mack's return comes four years after he resigned from the firm in a bitter power struggle with Purcell. His appointment was widely anticipated on Wall Street.

``This is obviously very positive,'' said Jennifer Chien, equity analyst with PNC Advisors. ``He's a long-time veteran of the organization, he knows the institutional business very well and he'll have a lot of the bankers and traders on board with him.''

Mack, 60, is known for executing a financial turnaround as CEO of Credit Suisse First Boston after he left Morgan Stanley in 2001. Now he inherits a Wall Street institution in crisis.

Mack faces low employee morale and poorly performing asset management and retail brokerage businesses. Morgan Stanley's second-quarter earnings disappointed Wall Street as margins eroded and revenues fell.

``It's going to take me some time to look at the firm, spend time with managers who run these businesses,'' he said.

Mack left Morgan Stanley after 29 years following the power struggle with Purcell, the architect behind Dean Witter & Co.'s 1997 takeover of Morgan Stanley that left Purcell in charge.

Mack, who had been president of Morgan Stanley since 1993, could not get Purcell to agree to give him more authority, nor was Purcell willing to step aside. Mack went on to run CSFB from 2001 through 2004.

Purcell, meanwhile, was ultimately unable to fully integrate Dean Witter, primarily a retail brokerage, with the investment banking and asset management divisions of Morgan Stanley.

His leadership was widely criticized and a series of high-profile executive resignations starting in late March encouraged a dissident group of shareholders and former executives to increase their efforts to get him fired.

The dissidents, led by former Morgan Stanley President Robert Scott, welcomed Mack's appointment and echoed his desire to have the departed talent return to the company.

``We applaud the board's openness in turning to John as an action clearly in the best interests of shareholders, clients and employees,'' the group said in a statement.
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