Fleming -- one of the architects of Merrill Lynch & Co Inc's sale to Bank of America Corp
The move comes just days after Morgan Stanley announced a reshuffling of its senior management team, pairing financial chief Colm Kelleher and key banker Paul Taubman to serve as co-heads of crucial investment securities unit. The New York bank also elevated Ruth Porat, global head of the financial institutions group, to chief financial officer.
Gorman, who will succeed John Mack as chief executive on January 1, worked with Fleming at Merrill Lynch.
It is yet one more indication that Gorman is putting his team in place, said Michael Holland, chairman of money manager Holland & Co in New York. These are people he respects and that have his back.
Gorman announced Fleming's hiring in an internal memo and called him an expert on the asset management industry, although he is better known as an investment banker. Gorman said among the goals for the asset management business is consistent profitability, an objective that has been elusive because of real estate losses.
Holland said Fleming's appointment signals a major vote of confidence that he can be transferred to the investment management unit.
Fleming left Bank of America after the Merrill Lynch deal closed in January and has been working as a senior research scholar at Yale University.
He has been portrayed as a key proponent of the sale of Merrill Lynch at the height of last year's financial crisis despite initial reluctance from then Merrill CEO John Thain. Thain has disputed this account.
In Andrew Ross Sorkin's book on the financial crisis, Too Big to Fail, Fleming was also credited with getting Bank of America to agree to pay Merrill bankers 2008 bonuses up to the same level as in 2007. He also got the bank to agree to an airtight material adverse change agreement, meaning that even if Merrill's businesses continued to deteriorate Bank of America couldn't easily back out of the deal.
Both elements of the deal proved to be very controversial as a public outrage was sparked by news about the bonuses and as figures in subsequent months showed that Merrill's businesses were in worse shape than had been publicly acknowledged and Bank of America CEO Kenneth Lewis threatened to back out of the deal.
Fleming joined Merrill Lynch in 1992 and from 2003 to 2007 co-headed Merrill Lynch's markets and banking group. Fleming, a noted rainmaker who focused on financial companies, oversaw Merrill's investment banking.
He will be joining Morgan Stanley in February.
(Reporting by Michael Erman and Steve Eder, Additional reporting by Martin Howell, editing by Martin Golan and Diane Craft)