The investment bank and brokerage company said Purcell would leave no later than March next year, the date of the next annual meeting.

In a letter released by Morgan Stanley, Purcell wrote: “It has become clear that in light of the continuing personal attacks on me and the unprecedented level of negative attention our firm — and each of you — has had to endure, that this is the best thing I can do for you, our clients and our shareholders. I will retire when my successor is appointed.”

Morgan Stanley shares rose 2,7% to $51,22 in morning trade.

The search for a replacement is under way and will be led internally by Charles Knight, the chief of Morgan Stanley’s compensation committee.

Knight said he would not consider John Mack, former Morgan executive and former CE of Credit Suisse First Boston. Mack announced last week he was joining a hedge fund.

Knight also said Morgan Stanley would not consider anyone aligned with a group of eight former executives who had challenged Purcell publicly and called for his resignation since March.

Purcell has been waging a high-profile battle with a group of dissident investors and former executives unhappy with the firm’s performance.

The dissident group is composed of eight former Morgan Stanley executives who held positions as high as chairman and president. They have been lobbying since early this year to oust Purcell. That fight has led to the departure of several top executives and traders at the firm.

Last week eight Morgan Stanley equity derivatives traders left or threatened to leave the company to join Wachovia. Sapa-AFP