Citi, Morgan venture may face the heat

Morgan Stanley's joint venture with Citigroup Inc's Smith Barney will create the biggest group of financial advisors at a time when some investors and brokers are seeking independence from Wall Street titans.

The venture, which New York-based Morgan Stanley will control with a 51 percent stake, would employ 20,390 brokers in more than 1,000 branches. The new entity would surpass the 16,000-strong "thundering herd" of brokers at Merrill Lynch & Co, which was acquired by Bank of America Corp on Jan 2.

"Brokerage is such a personal, intimate business that it's defied by the 'thundering herd' concept," said Arthur Levitt, a senior advisor to the Carlyle Group and former chairman of the US Securities and Exchange Commission who serves on the board of Bloomberg LP. "What we're going to see in the brokerage business is breakaways from these managed institutions and the beginnings once more of boutique brokerage firms."