Morgan Stanley 2010 Annual Report Download - page 37

controls and other restrictive governmental actions, as well as the outbreak of hostilities or political and
governmental instability. In many countries, the laws and regulations applicable to the securities and financial
services industries are uncertain and evolving, and it may be difficult for us to determine the exact requirements of
local laws in every market. Our inability to remain in compliance with local laws in a particular market could have a
significant and negative effect not only on our business in that market but also on our reputation generally. We are
also subject to the enhanced risk that transactions we structure might not be legally enforceable in all cases.
Various emerging market countries have experienced severe political, economic and financial disruptions,
including significant devaluations of their currencies, capital and currency exchange controls, high rates of
inflation and low or negative growth rates in their economies. Crime and corruption, as well as issues of security
and personal safety, also exist in certain of these countries. These conditions could adversely impact our
businesses and increase volatility in financial markets generally.
The emergence of a pandemic or other widespread health emergency, or concerns over the possibility of such an
emergency as well as terrorist acts or military actions, could create economic and financial disruptions in
emerging markets and other areas throughout the world, and could lead to operational difficulties (including
travel limitations) that could impair our ability to manage our businesses around the world.
As a U.S. company, we are required to comply with the economic sanctions and embargo programs administered
by OFAC and similar multi-national bodies and governmental agencies worldwide and the FCPA. A violation of
a sanction or embargo program or of the FCPA could subject us, and individual employees, to a regulatory
enforcement action as well as significant civil and criminal penalties.
Acquisition and Joint Venture Risk.
We may be unable to fully capture the expected value from acquisitions, joint ventures, minority stakes and
strategic alliances.
In connection with past or future acquisitions, joint ventures (including MSSB) or strategic alliances (including
with Mitsubishi UFJ Financial Group, Inc.), we face numerous risks and uncertainties combining or integrating
the relevant businesses and systems, including the need to combine accounting and data processing systems and
management controls and to integrate relationships with clients, trading counterparties and business partners. In
the case of joint ventures and minority stakes, we are subject to additional risks and uncertainties because we
may be dependent upon, and subject to liability, losses or reputational damage relating to, systems, controls and
personnel that are not under our control. In addition, conflicts or disagreements between us and our joint venture
partners may negatively impact the benefits to be achieved by the joint venture. There is no assurance that any of
our acquisitions will be successfully integrated or yield all of the positive benefits anticipated. If we are not able
to integrate successfully our past and future acquisitions, there is a risk that our results of operations, financial
condition and cash flows may be materially and adversely affected.
Certain of our business initiatives, including expansions of existing businesses, may bring us into contact,
directly or indirectly, with individuals and entities that are not within our traditional client and counterparty base
and may expose us to new asset classes and new markets. These business activities expose us to new and
enhanced risks, greater regulatory scrutiny of these activities, increased credit-related, sovereign and operational
risks, and reputational concerns regarding the manner in which these assets are being operated or held.
For more information regarding the regulatory environment in which we operate, see also “Supervision and
Regulation” in Part I, Item 1 herein.
Item 1B. Unresolved Staff Comments.
The Company, like other well-known seasoned issuers, from time to time receives written comments from the
staff of the SEC regarding its periodic or current reports under the Exchange Act. There are no comments that
remain unresolved that the Company received not less than 180 days before the end of the year to which this
report relates that the Company believes are material.
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