Top Morgan Stanley executive turns down E*Trade

August 29, 2012: 12:13 PM ET

Struggling online brokerage firm says it's close to hiring executive search firm.

E*Trade's trading babies

FORTUNE -- E*Trade may have to pay its babysitter overtime.

One of the top candidates to run the online trading firm, which is known for its trading baby television ads, says he isn't interested in the job. Greg Fleming, who heads Morgan Stanley's brokerage division and is overseeing its integration with Smith Barney, says he has no plans to leave his current position, according to sources close to Fleming.

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The Morgan Stanley (MS) executive's decision eliminates one of E*Trade Financial's (ETFC) reportedly top choices to take over the firm's CEO slot, which was vacated in early August when Steven Frieberg was ousted by the firm's board of directors. In the meantime, E*Trade, which has struggled to keep up with competitors TD Ameritrade and Charles Schwab, has appointed the chairman of its board Frank Petrilli to be the firm's interim CEO. Petrilli is getting $500,000 a month to fill the temp job.

Fleming is well-regarded on Wall Street and is reportedly close to Citadel Investment chief Ken Griffin, who is one of E*Trade's largest outside shareholders.

Fleming joined Morgan Stanley in late 2009 and is a rising star at the firm. Before that he was the President and COO of Merrill Lynch, and was instrumental is inking the acquisition of Merrill by Bank of America at the height of the financial crisis, which is widely seen as having saved Merrill from collapse. Nonetheless, Fleming left the combined firm shortly after the deal was completed. Griffin reportedly approached Fleming about taking over the top slot at E*Trade back in 2009, but Fleming decided to go to Morgan Stanley instead.

MORE: Morgan Stanley misses estimates, cuts staff

David Carroll, who runs Wells Fargo's asset management unit, is also reportedly under consideration for the E*Trade job.

An E*Trade spokesman said the firm hasn't official named any candidates for its CEO job. He said the firm is close to hiring an executive search firm and has named five board members to its search committee.

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