News Release

The American Stock Exchange, NASD Regulation, and the New York Stock Exchange Jointly Fine Morgan Stanley & Co. Incorporated $200,000

Washington, DC, Dec. 6, 2000 – The American Stock Exchange, LLC, NASD Regulation, Inc., and the New York Stock Exchange, Inc., as a result of a coordinated investigation, today announced that Morgan Stanley & Co. Inc. consented to a censure and $200,000 fine for violations arising from the inaccurate reporting of short interest from November 1996 to August 1998. Morgan Stanley also has consented to an undertaking regarding its procedures for reporting short interest to the three self-regulatory organizations (SROs). The disciplinary actions were brought by the three SROs and the fine imposed will be paid jointly to them by Morgan Stanley.

The Amex, NASD Regulation, and the NYSE found that during the 22-month period, Morgan Stanley inaccurately reported to the three SROs short positions in numerous securities as required by the rules of the SROs. The inaccurate reporting resulted from Morgan Stanley's overstating short positions that ranged from over 1,000 shares to over 1 million shares in certain securities. The SROs found that the inaccuracies were caused by the firm's failure to properly program its mainframe computer.

The SROs require each firm to maintain a record of total "short" positions in all customer and proprietary firm accounts in listed securities and report the information monthly to its SRO. A short position occurs when a security is sold that the seller does not own. The security is borrowed by, or for the account of, the seller. The seller maintains the short position until, at a later date, it is purchased and/or delivered for the account.

The reporting inaccuracies were initially discovered by the Amex in October 1998 as a result of an inquiry made to Morgan Stanley regarding a large change in the reported short position in an Amex-listed security. Morgan Stanley did not disclose the matter to all of the SROs until late November 1998, approximately three months after it became aware of the reporting inaccuracies.

The three SROs found that Morgan Stanley failed to provide reasonable supervision of its business activities in reporting to the SROs short positions in securities and failed to establish and maintain adequate procedures and controls to ensure compliance with its reporting obligations. Among other things, the SROs found that the firm failed to have in place adequate procedures to audit or review its computer systems to ensure that short position reports were prepared in a manner consistent with SRO rules; written procedures for the supervision of the steps to be followed by firm personnel for the preparation and submission of short position reports; and systems and procedures of follow-up and review adequate to ensure that the SROs were promptly notified after the discovery of the inaccurate reporting of short positions.

Morgan Stanley, which neither admitted nor denied the SROs' allegations or findings, has undertaken to review its procedures for reporting short interest to the SROs and has agreed to implement the appropriate new procedures (in addition to procedures implemented by the firm in August 1998) to ensure compliance with applicable SRO rules and the federal securities laws.