Executive - Morgan Stanley · PDF fileMorgan Stanley Executive Financial Services offers...

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Executive Financial Services

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Corporate executives face special challenges in managing personal wealth. For instance, you may find that your compensation package has left your portfolio heavily concentrated in your company stock. Or you may have restrictions on accessing your assets and obstacles to selling your shares, such as vesting and insider trading restrictions, making you feel like your assets are behind a locked door. Morgan Stanley Executive Financial Services offers strategic guidance to help you gain flexible access to your wealth as you need it. Your Financial Advisor can work with you to implement a plan that could open the door to greater financial freedom.

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guidance / p3 / Morgan Stanley can craft a diversification strategy to support your investment objectives, and tie the program into a comprehensive wealth management strategy.

endurance / p12 / Donating restricted stock can bring many benefits — both to you and the charity — and can help you and your family have an enduring impact on communities and future generations.

MaxiMize / p7 / As a key employee in your company, you may have been awarded restricted or control stock. Chances are these securities account for much of your wealth, and they need to be managed in the context of your bigger financial picture.

flexibility / p15 / SEC Rule 10b-18 provides a “safe harbor” for affiliated purchasers when these executives repur-chase shares of their company’s stock.

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A Diversity of Experience

executive financial services

Morgan Stanley Executive Financial Services (EFS) are specialized professionals educated in regulatory and SEC rules that affect corporate executives and their stock holdings.

Our dedicated EFS team supports you and your Financial Advisor to help de-termine how your company stock can be used for liquidity, asset protection and wealth transfer, through a variety of approaches, including:• Sales under Rule 144• A 10b5-1 Preset Diversification Program® (“PDP” or 10b5-1 Trading Plan)• Loans• Gifting• Corporate Repurchases by Executives

Working with you, your company’s corporate counsel and your Financial Advisor, Morgan Stanley can craft a diversification strategy to support your investment objectives and tie the program into a comprehensive wealth management strategy.

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Guidance

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The Morgan StanleyExecutive Financial Services Team

ExpEriEnCETeam of experienced professionals who

aim to assist the Financial Advisor in delivering the firm’s wealth

management services to corporate executives and holders of concentrated positions.

CuSToMizaTionThe EFS team works closely with you and

your Financial Advisor to structure, draft and execute customized strategies which are in sync with your risk management needs,

investment and liquidity objectives.

SupporTMorgan Stanley was one of the first

major Wall Street firms to invest in the establishment of a separate 10b5-1 PDP

Trading Desk to preserve open lines of communication between the firm’s PDP

clients and their Financial Advisors and strengthen and protect the

affirmative defense.

KnowlEdgEablEEFS, partnering with Financial

Advisors, offers premier service and guidance, while possessing

the knowledge to help ensure compliance with SEC rules

and regulations.

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MarKET lEadEr• Led the Rule 144 and 10b5-1 broker rankings for

the sixth year in a row in 2014• Ranked #1 in 10b5-1 market share for the

period 2005 through 2014, as reported by The Washington Service*

SErviCES • SEC Rule 144 compliance

• 10b5-1 PDP administration/execution• Loans and/or lines of credit

secured by eligible securities• Affiliated repurchases

• Hedging and liquidation strategies

* Source: The Washington Service from Form 144 filings in the period

from 2/1/2005 to 12/31/2014.

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Control and restricted Stock opportunities

restricted SecuritiesRestricted securities are acquired in an unregistered transaction, obtained from a company in a private trans-action or received as compensation for services. If you have restricted stock, it will usually have a “legend” stamped on the stock certificate indi-cating that the stock is not registered for public sale.

Control SecuritiesControl stock is owned by individuals or entities who directly or indirectly control the management of the issu-er — typically, senior officers, directors and certain large shareholders — often referred to as “affiliates.” Keep in mind that it is the security holder’s ability to control the company, not how the stock was acquired, that determines whether the securities are control securities.

As a key employee in your company, you may have been awarded restricted or control stock. While such a reward is beneficial and offers opportunities, it can have certain limitations. Chances are these securities account for much of your wealth, and they need to be managed in the context of your bigger financial picture.


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Maximize

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best practices

navigating rule 10b5-1 for insiders and Key EmployeesCompany insiders who want to buy or sell company stock, face two major hurdles. One is a great deal of uncer-tainty as to what is permissible and what might trigger potential insider trading liability, under SEC Rule 10b5. The other is infrequent, brief trading windows established by companies to allow insider transactions.

SEC Rule 10b5-1 gives directors, officers and others with access to material nonpublic information, also called insider information, about their company a way to buy and sell com-pany stock in a pre-established written trading plan. At Morgan Stanley, a 10b5-1 Preset Diversification Program® (PDP) — most commonly known as a 10b5-1 Trading Plan — can help you to achieve your portfolio objectives while providing an affirmative defense against allegations of insider trading.


KEy bEnEFiTS

Affirmative defense against potential claims of insider trading.

Access to public markets without regard to corporate blackout periods.

Reduce the risk associated with a concentrated equity position through diversification.

Discipline during volatile market fluctuations to help achieve personal monetization needs.

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Market leadership144 10b5-1 broker rankings (02/01/2005 – 12/31/2014)

Morgan Stanley has consistently led the market. From 2005 through 2014, we ranked first for market value of proceeds by executing over 21,500 10b5-1 plans.1

1 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 12/31/2014. Data from the period 2/1/2005 to 5/31/2009 reflects the formerly separate PDP 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. The above 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.

24.14%Morgan Stanley


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Many clients with control or restricted stock may not want — or be allowed — to readily sell their securities. But that doesn’t mean these assets need to stay idle.

loanS SECurEd by EligiblE rESTriCTEd and ConTrol SToCK

ExprESS CrEdiT linE (ECl) loanS A flexible loan or line of credit using eligible securities in your brokerage account as collateral. Offered by Morgan Stanley Smith Barney LLC.

Margin loanS A traditional brokerage loan enabling the purchase of additional securities to diversify your investment portfolio — an effective strategy to potentially expedite ownership requirements — offered by Morgan Stanley Smith Barney LLC.

porTFolio loan aCCounT (pla) A securities-based loan offered by Morgan Stanley Bank, N.A. A PLA loan/line of credit may be a cost-effective financing alternative for qualified applicants.

TailorEd lEnding Uses different assets and asset classes as collateral based on your unique needs. Offered by Morgan Stanley Private Bank, National Association.

In fact, a loan secured by your eligible securities may put these assets to work for you — by financing a particular pur-chase, generating cash flow for payment of tax and other obligations, or raising capital to pursue investment opportu-nities. Whatever your needs are, your Morgan Stanley Financial Advisor can

discuss potential strategies that focus on getting more of your wealth work-ing for you. There are risks associated with using your assets as collateral for a securities-based credit facility, includ-ing possible margin calls on short-term notice. Please see the disclosures at the end of this brochure for details.

liquidity Strategies

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unloCK ThE valuE in your porTFolio Through a STraTEgiC approaCh ThaT Can addrESS boTh SidES oF your balanCE ShEET

Your Financial Advisor can work with a Morgan Stanley Private Banker,* to help address your cash flow needs while navigating the regulatory requirements and risk associated with maintaining restricted stock positions. Unlock the value of your restricted portfolio and once approved, you gain quick access to funds which may enable you to:

• Explore small business opportunities• A margin loan may be used to purchase additional eligible securities for diversification

• Achieve ownership requirements• Purchase luxury items• Pay tax obligations• Fund higher education

• Meet general liquidity needs• Launch entrepreneurial opportunities

poTEnTial SoluTionS• Loans Secured by

Eligible Securities• Tailored Lending

aSSETS• Bonds / Stocks• Short-Term Investments• Cash or Cash Equivalents• Concentrated / Restricted

Positions• Business Ownership• Real Estate

liquidiTy nEEdS• Business Expansion and / or

Working Capital• Commercial Real Estate Investment• Tax Obligations• Short-Term / Long-Term Obligations• Unplanned Expenses

Liquidity Strategy

Liquidity Strategy

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Endurance

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wealth Transfer


As a result, you may be able to make a signifi-cantly larger contribution to a favored cause than you would have been able to make if the gift was in cash.

Gifts to qualified charities are exempt from gift tax and remove these assets from your estate. In addition, they may qualify for

current charitable income tax deductions.Morgan Stanley’s high-touch support can

provide guidance with various aspects of your philanthropic giving strategies for restricted or controlled stock. However, you should consult your company’s counsel to ensure adherence with varied regulatory rules.

Donating restricted stock can bring many benefits — both to you and to the charity — and can help you and your family have an enduring impact on communities and future generations. For instance, you can make contributions without tapping cash reserves or liquidating other assets.

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Safe harbor for repurchases

By working with the EFS team and your Financial Advisor, you can utilize this rule to:• Take advantage of bullish sentiments on your company stock• Meet affiliated retention requirements• Increase ownership in company stock• Protect yourself against market manipulation chargesCoupled with a 10b5-1 preset diversification strategy, you are also afforded an affirmative defense against insider trading liabilities.


SEC Rule 10b-18 provides a “safe harbor” for affiliated purchasers when these executives repurchase shares of their company’s stock. STarT now

Our goal is to provide you with guidance, know-how and experience so you can manage your equity compensation while meeting your overall portfolio objectives.

For more information about Morgan Stanley’s Executive Financial Services, please contact your Financial Advisor or the EFS team at 732-974-5006.

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Flexibility

* Private Bankers are employees of Morgan Stanley Private Bank, National Association.Morgan Stanley Smith Barney LLC is a registered Broker/Dealer, Member SIPC, and not a bank. Where appropriate, Morgan Stanley Smith Barney LLC

has entered into arrangements with banks and other third parties to assist in offering certain banking-related products and services. Investment services are offered through Morgan Stanley Smith Barney LLC.

Unless specifically disclosed in writing, investments and services offered through Morgan Stanley Smith Barney LLC are not insured by the FDIC, are not deposits or other obligations of, or guaranteed by, a bank and involve investment risks, including possible loss of principal amount invested.

Borrowing against securities may not be suitable for everyone. You should be aware that securities-based loans involve a high degree of risk and that market conditions can magnify any potential for loss. Most importantly, you need to understand that: (1) Sufficient collateral must be maintained to sup-port 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.

Tailored Lending is a loan/line of credit product provided by Morgan Stanley Private Bank, National Association, an affiliate of Morgan Stanley Smith Barney LLC. A Tailored Lending credit facility may be a demand or committed 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. The ongoing availability of a secured Tailored Lending loan/line of credit is contingent, among other things, on the client maintaining sufficient eligible collateral. Other restrictions may apply. The proceeds of a Tailored Lending loan/line of credit (including draws and other advances) may not be used to purchase, trade or carry margin stock; repay margin debt that was used to purchase, trade or carry margin stock; and cannot be deposited into a Morgan Stanley Smith Barney LLC or other brokerage account.

Portfolio Loan Account (“PLA”) is a securities-based loan/line of credit product offered by Morgan Stanley Bank, N.A., an affiliate of Morgan Stanley Smith Barney LLC. All PLA loans/lines of credit are subject to the underwriting standards and independent approval of Morgan Stanley Bank, N.A. PLA loans/lines of credit may not be available in all locations. Rates, terms and conditions are subject to change without notice. This document should not be construed as a commitment to lend. To be eligible for a PLA loan/line of credit, you must have a brokerage account at Morgan Stanley Smith Barney LLC,

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which shall serve as collateral for the PLA. The ongoing availability of the PLA is contingent, among other things, on you maintaining sufficient eligible col-lateral. Other restrictions may apply. The proceeds from a PLA loan/line of credit (including draws and other advances) may not be used to purchase, trade, or carry margin stock; repay margin debt that was used to purchase, trade or carry margin stock; and cannot be deposited into a Morgan Stanley Smith Barney LLC or other brokerage account.

Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association are members FDIC that are primarily regulated by the Office of the Comptroller of the Currency.

Express CreditLine (“ECL”) is a securities-based loan/line of credit product offered by Morgan Stanley Smith Barney LLC. All ECL loans/lines of credit are subject to the underwriting standards and independent approval of Morgan Stanley Smith Barney LLC. ECL loans/lines of credit may not be available in all locations. Rates, terms and programs are subject to change without notice. To be eligible for an ECL loan/line of credit, a client must have a brokerage ac-count at Morgan Stanley Smith Barney LLC that contains eligible securities, which shall serve as collateral for the ECL. The ongoing availability of the ECL is contingent, among other things, on a client maintaining sufficient eligible collateral. Other restrictions may apply. The information contained herein should not be construed as a commitment to lend. The proceeds from an ECL loan/line of credit (including draws and other advances) may not be used to pur-chase, trade or carry securities; repay margin debt that was used to purchase, trade or carry securities; and cannot be deposited into a Morgan Stanley Smith Barney LLC or other brokerage account.

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.

The contents of this document should not be construed as a commitment to lend. Please contact your Financial Advisor for more details. The outcome described within this brochure may not be attainable for all applicants. Issues relating to an applicant’s financial resources, creditworthiness, financial condi-tion or collateral value may affect the loan process, as well as an applicant’s eligibility for a loan/line of credit.

A diversification strategy does not assure a profit or protect against loss.Morgan Stanley Smith Barney LLC and its affiliates and their employees (including Financial Advisors and Private Wealth Advisors) are not in the business

of providing tax or legal advice. These materials and any statements contained herein should not be construed as tax or legal advice. Individuals should consult their personal tax advisor or attorney for matters involving taxation and tax planning, and their attorney for matters involving personal trusts and estate planning.

Preset Diversification Program is a registered Trademark of MSSB, protected in the United States and other countries.

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Executive - Morgan Stanley · PDF fileMorgan Stanley Executive Financial Services offers...

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