Morgan Stanley has selected Ted Beck to replace James Gorman as CEO

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Morgan Stanley has appointed Ted Beck as its new CEO, replacing James Gorman who is stepping down from the role after leading the Wall Street bank for nearly 14 years and building it into a wealth management giant.

Peck, 54, who was seen as the front-runner for the job, will begin his post on January 1. His appointment comes months after Gorman, 65, announced plans to step down. Beck runs investment banking and trading for Morgan Stanley and was one of three leading internal candidates for the position along with Andy Saperstein and Dan Simkowitz.

“We had an embarrassment of riches. We had three incredibly talented executives,” Gorman told the Financial Times. “Ted had spent 30 years at Morgan Stanley. . . And he never disappointed.

In a sign of efforts to retain other candidates, Saperstein, 56, will run Morgan Stanley’s asset management division in addition to his role in the wealth management department. Simkowitz, 58, who ran asset management, will take over Beck’s job at trading and investment banking.

Morgan Stanley said Wednesday that Simkovich will also become a co-chairman with Saperstein. Gorman will become CEO of the Board of Directors.

Tom Gloser, managing director of Morgan Stanley, said in a statement that the board’s decision to appoint Beck was unanimous.

Beck told the Financial Times that his appointment was “not a change in strategy.”

“We have a first-class team that will take on the next chapter, which is continuing to do what we’ve been doing with customers and continuing to grow the company,” Beck said.

Christian Polo, a banking analyst at Autonomous Research, said the appointment “makes sense” given that Beck oversees the bank’s commercial and investment banking businesses, its most complex and riskiest activities.

“The risk was always that you would lose him if he didn’t get the job, and that would have been an obvious negative,” Polo said.

Beck will inherit a bank that has changed dramatically from the one Gorman took over from John Mack in 2010, less than two years after Morgan Stanley nearly failed during the 2008 financial crisis.

Gorman revamped Morgan Stanley to focus on wealth and asset management, crystallizing its pivot with rapid trades for online trading platform ETrade and asset manager Eaton Vance.

The bank has about $6 trillion in assets under management with a goal of eventually reaching $10 trillion. Gorman talked about Morgan Stanley’s chances of reaching $20 trillion.

This strategy helped Morgan Stanley’s market capitalization outperform its investment banking rival, Goldman Sachs, which was less quick to diversify its business.

But even as investors welcome Morgan Stanley’s turnaround, its legacy investment banking business, which gives its brand extra prestige, has lagged behind JPMorgan Chase and Goldman in the league tables.

It has faced a highly publicized investigation by the Securities and Exchange Commission and the U.S. Attorney’s Office in Manhattan into its handling of crowd trading — a method of selling large amounts of stock — in what amounts to the most significant legal investigation it has faced in recent years. Morgan Stanley said in May that it was in talks about settling the case.