(FORTUNE Magazine) - Morgan Wields the Ax

When we told you Morgan Stanley CEO John Mack had installed James Gorman as the new chief of the bank's brokerage business ("Is Mack on the Right Track?" March 20, 2006), we suggested there might be blood in the water before long.

We speculated Gorman would "get rid of nonproductive brokers." It appears the bloodletting has begun. In an internal company memo from early May, Gorman reportedly explained that he would cut back on the number of brokers hired into the firm's training program, and in a more abrupt move was pink-slipping 500 trainees who "were not tracking toward long-term success in the business."

On the very day that story broke, Morgan (Research) announced it had agreed to pay a $15 million fine to the SEC for deleting thousands of e-mails relating to investigations going back to 2000. Progress isn't always pretty. -- Andy Serwer

Facebook Grows Up

In the six months since we reported on the startlingly quick rise of Facebook ("Facebook Stares Down Success," Nov. 28, 2005), the social- networking site has come to symbolize the best and worst of the online craze.

Venture capitalists are so excited about Facebook's growth that they've pumped in an additional $25 million, squelching chatter that the company was on the block for $2 billion. Lawmakers and parents, on the other hand, fear Facebook is too powerful a tool for sexual predators.

In early May a bill was put before Congress that threatens to ban the site, among others, in schools and libraries. But there are signs that Facebook is growing up. When FORTUNE visited Facebook, its founder, Mark Zuckerberg, 22, gave us a business card that read "i'm CEO ... bitch." He now carries cards that read: "Chairman and CEO." -- Adam Lashinsky