Morgan Stanley could be handing out thousands of more pink slips in the coming months as the investment bank contends with slumping revenues and the potential loss of business due to new regulations that could sharply curtail its trading activities.

Citing a source with direct knowledge of the matter, Fox Business News reported on its web site Tuesday that Morgan Stanley's senior executives have been spreading the word internally that the firm could slash as many as 3,400 more jobs, on top of the 1,600 it cut last month, by the middle of this year.

Analysts expect Morgan Stanley to report a loss for the fourth quarter when it reports earnings Thursday due to a slowdown in revenues in and costs associated with the integration of the brokerage Smith Barney, which it acquired from Citigroup Inc.

Long-term, though, company officials are more concerned with the impact of the so-called Volcker Rule on its proprietary trading operations, Fox Business reported. The rule, a key provision in the Dodd-Frank Act passed in 2010, would largely ban banks from using their own capital to make trades and force them to substantially reduce their investments in hedge funds.

The comment period on the rule drafted by regulators had been scheduled to expire Friday, but it was recently extended by another month, to Feb. 13.

Reached by Fox Business, a Morgan Stanley spokeswoman did not deny that more jobs cuts could be on the horizon. "We are done cutting for now but will closely monitor the environment and adjust accordingly," she said.

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