Eyebrows Are Raised Over Morgan Stanley

FINANCE

• Is Lehman Brothers CEO Richard Fuld in talks to sell the firm? “People on Wall Street” say the company might be up for grabs, but Lehman insiders say Fuld is not considering a sale. [DealBook/CNBC]

• Morgan Stanley CEO John Mack did not have a good day yesterday.
After reporting that the firm’s profits plunged in the second quarter, he then had to deal with the news that a rogue trader lost the firm $120 million. [NYP]

• The global head of Goldman Sachs’s investment-management arm, Edward Frost, will take on the new role of executive vice-president at Harvard University come fall. [DealBook/Financial News]

MEDIA
• The July issue of Italian Vogue tries to address the issue of racial stereotyping in fashion by photographing only black models. [NYT]
• Susan Lyne, who recently stepped down from Martha Stewart Living Omnimedia, is now in talks with Oprah. That leaves us wondering what went down at Lyne’s lunch with Time Warner’s Anne Moore the other day. [Fortune]
• Star says Julia Allison was an “embarrassment.” Seriously? [Radar]

REAL ESTATE
• Carly Simon is selling her West Village co-op for $3.8 million. She doesn’t need the space, since she’s living almost full-time in Martha’s Vineyard. Plus, Heather Mills is anxious to get settled in her new Village digs, and Rachael Ray finally closed on a $2.9 million Southampton mini-compound. [NYP]
• After yesterday’s news that South Street Seaport is going to be turned into condos, city councilman Alan Gerson, who represents lower Manhattan, spoke out against the project, saying that the plan was “certainly not going to pass in its present form.” [NYT]
• The courts are offering to help New York homeowners who face foreclosures. [NYT]

LAW
• The managing partners of New York law firms Girvin & Ferlazzo and Hogan, Sarzynski, Lynch, Surowka & DeWind settled with Attorney General Cuomo in his probe of alleged public-pension-fund abuses. Their reason for cutting the deal? It made good business sense. [Law.com]
• Several lawyers could make good running mates for Barack Obama. [Law.com]
• A Schulte Roth & Zabel summer associate jokingly put a guy at the company picnic in a headlock and called him a punk, and it turned out to be a partner. Oops. [Above
the Law]