Hoit wasn't recommending the technology. "As I don't understand anything about Techspan or the products/services they offer, I would appreciate some advice or assistance on ways we could expand these relationships," Hoit wrote, adding: "It is also important for you to understand that Welsh Carson represents a very important relationship to Investment Banking and The Financial Sponsors Group."
Other bankers at Morgan Stanley also leaned on the firm's IT department to smooth the way for lucrative underwriting deals by considering technology services from vendors about to go public. In an E-mail written on Jan. 11, 2002, Morgan Stanley's senior banker for the technology sector in Asia, Crawford Jamieson, complained that the company's IT department wasn't moving fast enough to give work to Indian vendor Wipro. Morgan Stanley was one of the lead underwriters on Wipro's listing on the New York Stock Exchange. "In November 2000, when the Wipro ADR was about to begin trading on the floor of the NYSE, John Mack promised Azim Premji, the Chairman and founder of Wipro, that MS would commit to providing some outsourcing work. ... We need someone senior in the IT organization to cut through the red tape and get Wipro some kind of business," wrote Jamieson.
Later in that same E-mail, however, Jamieson said, "I would note that Wipro is not asking to be 'given' business. They only want to be in a position to compete for it. So all we need really is to get them more in the flow."
Morgan Stanley insists that a vendor's status as a banking customer doesn't affect its chances of winning an IT contract. "The firm uses a rigorous vendor selection process for third-party IT vendors and makes decisions based on merit," a spokesman said via E-mail.
Riel's complaint alleges that the newly disclosed E-mails show that Chiarello and other Morgan Stanley execs were improperly using the company's IT systems and budget for personal and professional gain. Among the other allegations: Chiarello asked a technician from Cisco Systems to install a wireless network in a home he was building in New Jersey. In an April 10, 2003, E-mail, Chiarello asks a Cisco employee, "Are you setting up the wireless in my new house? I am moving in 4 weeks." A Morgan Stanley spokesman, while confirming that the E-mail exists, called its contents "factually untrue."
Chiarello also appeared to receive hard-to-get Yankees vs. Red Sox playoff tickets from an EMC staffer in October 2003. "Horrible game yesterday. When they win tonight we have you covered for the World Series," wrote Lennox Stuart, who managed EMC's Morgan Stanley account. Stuart also noted that he tried to arrange sideline passes for the game. "No access, however, with these seats you are almost there anyway!" wrote Stuart.
Chiarello is also, apparently, a basketball fan. "As for the Celtics, I do not believe the post season schedule has been set yet. I do, however, have a request in for the game if there is one that night," wrote Stuart in April 2003.
Morgan Stanley's code of ethics allows execs to receive gifts of "nominal value." It isn't clear whether that would apply to sports tickets that were being sold for hundreds of dollars on eBay.
Morgan Stanley says Chiarello, who remains CTO, did nothing wrong. The firm "allows employees to participate in legitimate business entertainment, which may include attending sporting events with vendors," a spokesman says.
Riel says in his original complaint that he sent a package containing copies of the E-mails to Crawford in January 2004, covered by a Post-It note bearing the words, "Needs Investigation." But rather than investigate Chiarello, Crawford handed the documents over to Chiarello to do with them as he saw fit, according to the complaint. Shortly thereafter, Riel became the subject of an internal investigation that ultimately led to his dismissal, according to the complaint. It was later in that same month that Morgan Stanley IT staffers allegedly set about reconfiguring Crawford's E-mail system.
A Morgan Stanley spokesman says such a package "was never received and there is no evidence other than Mr. Riel's own claim that any such package was ever sent."
Paul McDougall is a former editor for InformationWeek. View Full Bio