Morgan Stanley advises pulling money from Paulson funds

Morgan Stanley Smith Barney is recommending that its financial advisers pull client money out of Paulson's Advantage and Advantage Plus funds, a person familiar with the matter said on Wednesday. Morgan Stanley had been watching Paulson's performance for months and prepared for this move when it told advisers last spring to stop putting new money into those funds, advisers with the firm have said. Since then losses at the Advantage funds have deepened to double digits, and now the company is recommending, but not requiring, that its advisers tell their wealthy clients it is time to turn their backs on the 57-year-old Paulson. Investors on the Morgan Stanley platform have already asked to pull out about $36 million of the $100 million that is expected to be redeemed. The move comes only months after Citigroup's private bank decided to withdraw $410 million.