Morgan Stanley may be about to merge with Smith Barney, putting James Gorman in charge of a wirehouse with more than 20,000 reps.

On Friday various media outlets widely reported (see Barron's, Bloomberg, CNBC, Forbes, the LA Times, MarketWatch and Reuters) that Citigroup is talking to Morgan Stanley about selling Smith Barney.

For fundsters, this distribution powerhouse would definitely be something to keep an eye on. (Bloomberg claims Morgan Stanley has more than 8,000 reps and Citi another 11,000, which would put them at a massive 19,000 or so together, assuming not too much pre- or post-merger attrition.)

Under the terms of the still-being-negotiated deal, the two firms would set up a joint wirehouse venture, 51 percent owned by Morgan Stanley and 49 percent by Citi, with Morgan having the option to buy out Citi's share over the next three to five years.

Early reports suggest that Morgan Stanley co-President James Gorman will run the combined brokerage.

The news comes in the wake of the announced departure of Citi senior counselor and board member Robert Rubin. 

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