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Only the Men Survive

“If you ask a woman now if it’s different than it used to be, they say it’s the same or worse,” says Linda Bialecki, who runs a Wall Street search firm. “It’s worse because it’s gotten so much more subtle. It’s hard to argue about subtle. But it’s a thousand cuts.”

What was happening to Cruz didn’t seem all that subtle. She was seen as a ballbuster: “We understand that she is very fierce and enjoys shredding inflated reputations into small packets of confetti,” wrote a financial-gossip columnist around the same time that the pejorative “Cruz Missile” first appeared in the press. She was seen as overly emotional, her voice sometimes cracking in contentious meetings. (“Having an emotional reaction to things is where I’ve made most of my mistakes,” she told a group of students at Harvard.) Much like Hillary Clinton, she was accused of crying for the purposes of manipulation. “She wanted to compete with the guys, but she was not beyond crying when it was useful,” says a onetime male colleague.

Most critically, she was not taken at all seriously by a number of her male colleagues: “She’d give these speeches, and the eyes would roll,” says one former executive. The attitude toward attending meetings headed by Cruz was “take [the] pain and move on,” says a current Morgan Stanley employee. During a year-end management meeting in 2004, one mid-level executive interrupted Cruz’s speech to ask, “Are you high? Because I really don’t know what you’re talking about.”

“High?” Cruz asked. “You mean stoned?”

“Yeah, exactly,” he said. “Smoking it.”

Everyone in the room laughed—except Cruz. (She fired the man for unrelated reasons six months later.)

In 2004, Pandit wrote a critical evaluation of Cruz, including charges that she was dismissive of shareholders and board members. Angered, Cruz sent Pandit a rebuttal to his evaluation and traveled to London to seek the support of Laura Tyson, then dean of the London Business School and the sole female board member at Morgan Stanley. Tyson was “a strong advocate of Zoe’s,” says a friend of Cruz’s.

But Cruz’s battle with Pandit was about to get much bigger than the two of them. As Morgan Stanley’s stock foundered and the firm fell behind its competitors, a group of dissident outside advisers began to plot CEO Phil Purcell’s ouster. This veteran gang of eight former Morgan Stanley executives—the so-called Group of Eight, or the “grumpy old men”—felt Purcell’s risk-averse management style had dragged down their net worth.

The “G8” sought insiders—among them, Pandit and Havens—who would join with them for an all-out insurrection. There was already dissent brewing internally. During a fateful off-site meeting attended by both Pandit and Cruz in 2004, one senior executive, Joe Perella, had argued that they all had to band together if they wanted to wield influence. “If we lock arms, there’s nothing [Purcell] can do,” Perella said, according to Blue Blood & Mutiny, a recent book about the 2005 power struggle at Morgan Stanley.

For Cruz, it was a tricky situation: There was pressure from the other senior executives to align with the G8 and force Purcell out. But that would leave Cruz at the mercy of Pandit, who was popular with the dissident group and considered a favorite to one day run Morgan Stanley. Cruz decided to go against her colleagues and back Purcell, which at first looked like a good move. Purcell cut the legs out from under Pandit and Havens, effectively forcing them out by giving Cruz the co-presidency and a chair on the board of directors. But her new position of power had come with a price: The G8 branded her a traitor, and so did the many members of the equities division who remained loyal to Pandit. It was an intense time. Though her office was full of congratulatory flowers and messages—“It looks like a funeral home, my office!”—Cruz told a group of investors in London that week, “If the electricity were any higher in New York, I think my hair would catch on fire.”

Occasionally, the pressure got to her. When she forgot her security pass and was asked for her identification at Morgan Stanley headquarters, she unloaded on the guards, screaming, “Do you know who I am?” But other times she wielded her new power with a pert confidence. During a company gathering shortly after Pandit was pushed out, she declared the company the “United States of Morgan Stanley” and acted as the bulldog for Purcell’s embattled regime. “It is actually enheartening [sic] to see how many people within Morgan Stanley are getting angry, and I think that’s good,” she said. “We need to stay united, and we need to fight this.”