Here’s a tricky question. Among the better-known companies in the stock market, what’s the best risk reward play? That’s the question I posed to one of the sharpest Wall Street traders I know, a moneymaking machine who shuns the limelight, is never publicly quoted, and never appears on any TV business show. His pick, a stock he recently started to buy, is brokerage biggie Morgan Stanley.

His rationale: Morgan Stanley’s embattled CEO Philip Purcell “has got to go; it’s only a question of when. And when he does, the stock will enjoy a sharp rise.”

As has been widely reported, Mr. Purcell is under fire, especially from a dissident group of eight ex-MS officials who are seeking his ouster. Although many key personnel have recently left the firm, due in large part to disenchantment with Mr. Purcell’s leadership, MS’s board has expressed full confidence in him. So for the moment, at least, it’s a standoff and business as usual, although head hunters galore are said to be besieging key people within the firm and more departures are expected.

Our trader, though, thinks Mr. Purcell is on borrowed time, reasoning that MS’s board at some point will realize it has a fiduciary responsibility to MS’s stockholders and not to Mr. Purcell. That catalyst, he believes, may be a lawsuit by some unhappy shareholders, perhaps by a state-owned pension fund. Such an action, he believes, would probably mark the beginning of the end of Mr. Purcell’s reign, since the directors, he feels, fearing potential liabilities (such as a bad image in their own business environments) and unfavorable press coverage, would eventually cave in and acquiesce to the calls for his ouster.

Reflecting the management turmoil at MS, its stock has taken a beating, tumbling from a 52-week high of $60.51 to its current price of $48.80, which is just a shade above its 12-month low of $46.54. It closed last year at $55.52.

The trader views MS’s shares at present levels as “a giveaway” and “a gem of a risk-reward stock play.” He further believes if Mr. Purcell resigns or if there’s any inkling he’s on his way out – at present, there are no such indications; the MS chief, in fact, has made it clear he’s staying – the trader sees an immediate $5-$6 rise in the price of the stock. Overall, he believes the downside from here is about $3, while the upside is around $15. And if investors are lucky, he said, there could be, as widely speculated, a possible takeover bid (with HSBC a rumored name). The trader thinks any buyout offer would likely be between $65 and $70 a share and possibly even run north of $70.

It sounds intriguing, but one MS analyst who claims to know Mr. Purcell pretty well and believes the brain drain will be remedied thinks it would be downright foolish for anyone to sell the MS skipper short. “I think you would have to drag him out kicking,” the analyst believes. To which the trader responds: “Wait till the first lawsuit!”

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If you can believe some regulators in New York Attorney General Eliot Spitzer’s office, 79-year-old Maurice “Hank” Greenberg, who resigned in March as CEO of insurance giant American International Group after being caught up in an insurance-industry scandal, could well be headed for prison. That, in effect, is what one of the city’s top criminal attorneys said he was told by contacts in Mr. Spitzer’s office in respect to its well-publicized AIG investigation. In brief, the attorney was emphatically told that Mr. Spitzer’s office has a sufficiently strong case to ensure a jail term for the former AIG chief and may well seek it.

In response to the board’s insistence, Mr. Greenberg, who has an estimated net worth of more than $3.2 billion, resigned after it was determined that he had initiated a complex transaction about four years ago that regulators felt had improperly inflated AIG’s earnings. After his resignation, he transferred more than $2 billion of his AIG stock holdings to his wife.

The insurance industry scandal became public knowledge last October when Mr. Spitzer sued insurance broker Marsh & McLennan for defrauding its customers by bid-rigging and steering business to insurers in exchange for special commissions. One of those insurers was AIG. Mr. Greenberg’s son, Jeffrey, who headed Marsh & McLennan at the time, was forced to resign, and subsequently some former AIG executives pleaded guilty to criminal charges arising from Mr. Spitzer’s industry investigations.

Asked about Mr. Spitzer’s probe of Mr. Greenberg, a spokeswoman, Jaunita Scarlett, would only say: “We plan to prosecute the case to the fullest extent.” She would not comment on internal remarks suggesting a possible jail term for Mr. Greenberg. Mr. Spitzer has already said he might file a civil or criminal suit against Mr. Greenberg. Howard Opinsky, a spokesman for Mr. Greenberg’s attorneys, declined comment, saying it would be premature.