AddedRisk Factors
predict, and we could realize significant losses if extreme market events were to occur.
The 10-K against last year's
156 changes: 28 added, 23 removed, 103 reworded, 2 quiet changes
10-K 0000895421-26-000086 (2026-02-19) vs 10-K 0000895421-25-000304 (2025-02-21)
The redline
The paragraph that changed most in each section
Marked against last year's 10-K:
cut words struck through, new words highlighted and underlined.
Accounting Policies 251 words changed in this paragraph; it is 32% similar to last year's version.
The Firm’s designated fair value hedges consist of interest rate swaps designated as hedges of changes in the benchmark interest rate of certain fixed-rate AFS securities and senior borrowings. The Firm also designates interest rate swaps as fair value hedges of changes in the benchmark interest rate of certain fixed rate deposits. The Firm is permitted to hedge the full, or part of the contractual term of the hedged instrument. The Firm uses regression analysis to perform an ongoing prospective and retrospective assessment of the effectiveness of these hedging relationships. For qualifying fair value hedges of benchmark interest rates, the change in the fair value of the derivative, offset by the change in the fair value attributable to the change in the benchmark interest rate risk of the hedged asset (liability), is recognized in earnings each period as a component of Interest income (expense). For AFS securities, the change in fair value of the hedged item due to changes other than the risk being hedged will continue to be reported in OCI. When a derivative is de-designated as a hedge, any basis adjustment remaining on the hedged asset (liability) is amortized to Interest income (expense) over the remaining life of the asset (liability) using the effective interest method. For certain AFS securities, the Firm also applies the portfolio layer method of hedge accounting, which permits prepayable and non-prepayable assets to be included in the portfolio and allows more of the portfolio to be hedged. Further, the portfolio layer method of accounting requires that basis adjustments are maintained at the portfolio level and not allocated to individual items until certain de-designation events occur. The amount designated as hedged is the sum of the notional amounts of all outstanding layers in each portfolio. Refer to Note 6 and Note 7 to the financial statements for additional information on portfolio layer method hedging.
Source: Item 8, Note 2 – Significant Accounting Policies, 10-K 0000895421-26-000086 vs Item 8, Note 2 – Significant Accounting Policies, 10-K 0000895421-25-000304
Legal Proceedings 138 words changed in this paragraph; it is 63% similar to last year's version.
Beginning in February of 2024, Morgan Stanley Smith Barney LLC (“MSSB”) and E*TRADE Securities LLC (“E*TRADE Securities”), among others, have been named as defendants in multiple putative class actions pending in the federal district courts for the District of New Jersey and SDNY. The class action claims have been brought on behalf of brokerage, advisory and retirement account holders, alleging various contractual, fiduciary, and statutory claims (including under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §1962(c)-(d)) that MSSB and/or E*TRADE Securities failed to pay a reasonable rate of interest on its cash sweep products. All matters pending in the SDNY (which focus solely on MSSB’s cash sweep program) were consolidated into one action styled Estate of Sherlip, et al. v. Morgan Stanley, et al. An amended class action complaint was filed on August 15, 2025. On September 12, 2025, MSSB moved to dismiss the complaint. The cases are at an early stage with motions for consolidation matters pending in the District of New Jersey (which includes claims against both MSSB and transfer currently pending. E*TRADE Securities) have been consolidated into one action styled In re E*TRADE Cash Sweep Litigation, No. 2:24-cv-00603. The Firm awaits the appointment of lead counsel and, thereafter, the filing of a consolidated complaint in that matter. Together, the complaints seek, inter alia, certification of a class classes of plaintiffs, unspecified compensatory damages, equitable and injunctive relief, and treble damages. The Firm is also responding to requests from state securities regulators regarding brokerage account cash balances swept to the affiliate bank deposit program.
Source: Item 3, via Note 14 – Commitments, Guarantees and Contingencies, 10-K 0000895421-26-000086 vs Item 3, via Note 14 – Commitments, Guarantees and Contingencies, 10-K 0000895421-25-000304
MD&A 116 words changed in this paragraph; it is 58% similar to last year's version.
For the 2024 2025 capital planning and stress test cycle, we submitted our capital plan and company-run stress test results to the Federal Reserve on April 5, 2024. 7, 2025. On June 26, 2024, September 30, 2025, the Federal Reserve published summary results announced that it had reduced Morgan Stanley’s SCB from 5.1% to 4.3%, effective on October 1, 2025 in response to the Firm seeking reconsideration of its supervisory stress tests of each large BHC, preliminary SCB announced in which the projected decline in our CET1 ratio in the severely adverse scenario increased from the prior annual supervisory stress test by 50 basis points, from 4.1% to 4.6%. Following the publication of the supervisory stress test results, we announced that our SCB will be 6.0% from October 1, 2024 through September 30, June 2025. In addition to the projected decline in our Common Equity Tier 1 ratio in the severely adverse scenario, our SCB reflects the increase in our common stock dividend in the dividend add-on. Together with other features of the regulatory capital framework, this SCB results in an aggregate Standardized Approach Common Equity Tier 1 CET1 ratio of 13.5%. 11.8%. Generally, our SCB is determined annually based on the results of the supervisory stress test.
Source: Item 7, 10-K 0000895421-26-000086 vs Item 7, 10-K 0000895421-25-000304
Risk Factors 99 words changed in this paragraph; it is 77% similar to last year's version.
We are subject to numerous political, economic, legal, compliance, tax, operational, franchise and other risks that are inherent in operating in many countries, including risks of possible nationalization, expropriation, price controls, capital controls, exchange controls, increased taxes, levies and tariffs, cybersecurity, data transfer and outsourcing restrictions, regulatory scrutiny regarding the use of new technologies, prohibitions on certain types of foreign and capital market activities, limitations on cross-border listings and other restrictive governmental actions, as well as the outbreak of hostilities or political and governmental instability, including tensions between China the U.S. and its significant trading partners, such as China, as well as the U.S., the expansion or escalation of hostilities between Russia and Ukraine or in the Middle East, or the initiation outbreak or escalation of hostilities or terrorist activity around the world world, and the potential associated impacts on global and local economies and our operations. In many countries, the laws and regulations applicable to the securities and financial services industries and multinational corporations are uncertain, evolving and subject to sudden change or may be inconsistent with U.S. law. It may also be difficult for us to determine the exact requirements of local laws in every market or adapt to changes in law, which could adversely impact our businesses. Our inability to remain in compliance with local laws in a particular market could have a significant and negative effect not only on our business in that market but also on our reputation generally. We are also subject to the risk that transactions we structure might not be legally enforceable in all cases.
Source: Item 1A, 10-K 0000895421-26-000086 vs Item 1A, 10-K 0000895421-25-000304
Every change, by type
Sentences and paragraphs added, removed or reworded
Sentences and paragraphs of MS's Risk Factors and MD&A, 10-K 2026-02-19 against 10-K 2025-02-21. Each links to the text at sec.gov.
AddedRisk Factors
Our businesses and operations may also be adversely impacted by inadequate data quality management processes, including failure to meet defined expectations related to the appropriate completeness, timeliness and accuracy of data in reports, models or other data deliverables.
AddedRisk Factors
operations and/or increase costs. Any theft of data, technology or intellectual property may negatively impact our operations and reputation, including disrupting the business activities of our subsidiaries, affiliates, joint ventures or clients conducting business in those jurisdictions.
AddedRisk Factors
authorities take significant action against us or our industry, or if we discover significant employee misconduct or illegal activity.
AddedRisk Factors
“Quantitative and Qualitative Disclosures about Risk—Legal, Regulatory and Compliance Risk.”
AddedRisk Factors
Firm initiatives, which may heighten the potential conflicts of interest or the risk of improper sharing of information.
AddedRisk Factors
As a U.S. company, we are required to comply with the economic sanctions and embargo programs administered by OFAC and similar multinational bodies and governmental
AddedRisk Factors
concerns regarding the manner in which these assets are being operated or held, or services are being delivered.
Show the other 13
AddedRisk Factors
the way we respond is perceived negatively, our business and reputation may suffer.
AddedMD&A
•The Firm expense efficiency ratio was 68% compared to 71% in the prior year, demonstrating operating leverage while continuing to invest in our businesses.
AddedMD&A
loans, while Borrowings, Securities loaned and Securities sold under agreements to repurchase generally incur interest expense.
AddedMD&A
4.The number of stock plan participants declined slightly in 2025, primarily as a result of the previously announced disposition of the Firm’s EMEA stock plan business.
AddedMD&A
•Non-compensation expenses were relatively unchanged compared with the prior year as higher marketing and business development costs and increased technology spend were offset by lower amortization of intangible assets.
AddedMD&A
6.As of December 31, 2025, 2024, and 2023, Alternatives and Solutions includes Parametric Long-Term period-end AUM of $524 billion, $423 billion and $336 billion, respectively. Parametric Long-Term products generally have lower average fee rates than other Alternatives and Solutions products.
AddedMD&A
Consistent with the Firm’s strategic objective of ongoing growth of eligible assets at MSBNA, on February 14, 2026, the fixed income derivatives business of Morgan Stanley Capital Services LLC (“MSCS”) was merged into MSBNA.
AddedMD&A
•ASU 2025-06 - Internal-Use Software (Issued September 2025). This update introduces targeted improvements to the recognition and capitalization guidance for internal-use software costs. The update eliminates the prior “project stage” framework and instead requires capitalization of software development costs when (i) management has authorized and committed to funding the software project, and (ii) it is probable that the project will be completed and the software will be used to perform its intended function. In assessing the probability threshold, entities are required to evaluate whether significant development uncertainty exists, including whether the software contains novel or unproven functionality or whether significant performance requirements have not been identified or continue to be substantially revised. The update is effective for the Firm beginning January 1, 2028, with early adoption permitted. Transition may be applied prospectively, retrospectively, or under a modified approach. We are currently evaluating this accounting update.
AddedMD&A
•ASU 2025-07 - Derivatives Scope Refinements and Share-Based Consideration from a Customer (Issued September 2025). This update introduces targeted refinements to the derivatives and revenue recognition accounting guidance. It expands an existing scope exception for derivative accounting to exclude certain non-exchange-traded contracts. The update also clarifies that share-based payments from a customer are treated as noncash consideration under the revenue recognition standard until the related performance obligations are fulfilled and the right to the consideration is unconditional. The update is effective for the Firm beginning January 1, 2027, with early adoption permitted. Transition may be applied prospectively, or under a modified retrospective approach. We are currently evaluating this accounting update; however, we do not expect a material impact on our financial statements upon adoption.
AddedMD&A
•ASU 2025-08 - Purchased Loans (Issued November 2025). This update expands the application of the “gross-up” approach for purchased credit deteriorated financial assets under Topic 326 to include purchased seasoned loans (excluding credit cards), measured at amortized cost that are not credit deteriorated. Purchased seasoned loans include loans obtained in a business combination or loans acquired at least 90 days after origination and the acquirer was not involved in the origination, either through an asset purchase or through consolidation of a variable interest entity. The gross-up approach requires recognition of an allowance for credit losses at acquisition with a corresponding increase to the amortized cost basis of the loan. The update is effective for the Firm beginning January 1, 2027, with early adoption permitted. Transition will be applied prospectively to loans acquired on or after the adoption date. We are currently evaluating this accounting update.
AddedMD&A
•ASU 2025-09 - Hedge Accounting Improvements (Issued November 2025). This update improves hedge accounting guidance by clarifying certain aspects and aligning hedge accounting more closely with the economics of an entity’s risk management activities. The ASU enables entities to apply hedge accounting to a greater number of highly effective economic hedges by making targeted improvements to several areas including, but not limited to, the similar risk assessment for cash flow hedges. The update is effective for the Firm beginning January 1, 2027, with early adoption permitted. The updates should be applied prospectively for all hedging relationships as of the date of adoption. We are currently evaluating this accounting update; however, we do not expect a material impact on our financial statements upon adoption.
AddedMD&A
•ASU 2025-10 - Government Grants (Issued December 2025). This update introduces guidance on the accounting for government grants, including recognition, measurement and presentation requirements to reduce diversity in practice and increase consistency among business entities. The guidance excludes transactions within the scope of ASC 740, Income Taxes, government guarantees and the benefit of below-market interest rate loans. Grants related to an asset or to income will be recognized when it is probable that an entity will comply with the conditions attached to the grant, the grant will be received and the related expenses that the grant is intended to compensate have been incurred. For grants related to an asset, entities may elect either a deferred income approach or a cost accumulation approach. The update is effective for the Firm beginning January 1, 2029, with early adoption permitted. Transition may be applied on a modified prospective approach, a modified retrospective approach or on a full retrospective approach. We are currently evaluating this accounting update.
AddedMD&A
•ASU 2025-11 - Interim Reporting (Issued December 2025). This update improves the navigability of interim disclosure requirements and clarifies when that guidance is applicable. The amendments also add a principle for disclosing material events since the last annual reporting period, which aligns U.S. GAAP interim financial statement requirements with SEC regulations for registrants. The amendments do not expand or reduce existing disclosure requirements, rather they provide clarity on existing interim reporting requirements. The update is effective for interim periods beginning January 1, 2028, with early adoption permitted. Amendments may be applied prospectively or retrospectively. We are currently evaluating the disclosure impact of this accounting update; however, we do not expect a material impact on our financial statements upon adoption.