Morgan Stanley to Spin Off Hedge Fund Unit (MS)

Morgan Stanley (NYSE: MS) plans to spin off FrontPoint Partners, the Greenwich, Connecticut hedge fund it bought in 2006, according to people familiar with the situation.

Morgan Stanley has been weighing the future of its stakes in several funds following the passage of the financial reform bill, which restricts bank ownership of such funds.

Morgan Stanley spokesperson Erica Platt declined to comment on the matter.

According to a CNBC.com report, "The fund has been interviewing candidates for top positions following the spinoff, one person said. It has also informed certain employees that they may need to seek employment outside the fund following the spinoff, according to another employee."

Shares of Morgan Stanley gained more than 2.5% Monday, to close at $27.68.