Morgan Stanley (NYSE:MS) Fires Mitch Petrick as Head of Trading

After major rivals outperformed the institutional security division of Morgan Stanley (NYSE:MS), head of trading Mitch Petrick was shown the door.

The institutional securities unit of Morgan Stanley is the largest one in the company, so its impact significant enough to require performance equal to or better than its rivals in order to compete against them and remain a viable, growing company; thus the ouster of Petrick.

Two other senior executives from the company were assigned to take the place of Petrick. Named as co-presidents of the division are 48-year-old Paul Taubman, who had headed up the investment banking unit, and Colm Kelleher, 52, who is the Chief Financial Office of the Morgan Stanley.

Assignments for the two will have Kelleher taking over the sales and trading department, while Tauman will manage the investment banking side of things. Replacing Kelleher as CFO will be Ruth Porat, 52, who now leads the team that advises various financial institutions. Porat is the first woman in Morgan Stanley history to land the CFO job.

Add to this current Morgan Stanley CEO John Mack being replaced by co-president John Gorman at the end of the year, and you have major changes in almost every part of the top echelon of the company. Mack himself will remain as the chairman of the company even with the changes take place.

For Petrick, this isn’t unexpected, as revenue from the division he ran dropped from $21.4 billion a year ago to $6.87 billion in the first nine months of 2009. Compare that with the performance of major rivals like JPMorgan Chase & Co (NYSE:JPM) and Goldman Sachs (NYSE:GS), and there was no doubt this would be the decision of the Morgan Stanley board.

The trading division of JPMorgan Chase surge on $17.9 billion in sales, up year-over-year from $6.6 billion, while Goldman Sacks almost doubled its trading revenue from $13.7 billion to $27.3 billion during that same time period. The performance of his rivals was too great for Petrick to overcome to keep him in his trading position, although it is said he is looking for another position in the company at this time.

Morgan Stanley seems to be happy with chief operating office Thomas Nides, who was given more authority and responsibility in that role with the company, as he will take over the responsibilities of Jim Rosenthal, who was named head of the Morgan Stanley Smith Barney retail joint venture. Rosenthal will be COO of the unit and be over corporate strategy in that regard. He was formerly over operations and technology in Morgan Stanley, which Nides will now head up.

Other strategies the company will employ to shore up its trading division is to add approximately 400 more employees to the unit.