BC-MORGANSTANLEY/SHAREHOLDERS (UPDATE 1)

UPDATE 1-Morgan Stanley's Gorman-Wall St must rebuild trust

+ CEO says Wall Street must rebuild trust

+ Says probes creating "extremely fluid" environment

+ Says regulation is not Wall Street vs Main Street battle

PURCHASE, NEW YORK (Reuters) - Morgan Stanley Chief Executive James Gorman said Wall Street must "rebuild trust" with Main Street amid a growing disconnect.

"We need to understand why people are so angry at Wall Street," Gorman said on Tuesday at Morgan Stanley's annual meeting of shareholders.

Gorman said Morgan Stanley finds itself in an "extremely fluid" environment in light of ongoing investigations and regulatory proposals from Washington.

Gorman, who became CEO on Jan. 1, met with Morgan Stanley shareholders less than a week after sources said the bank was wrapped into investigations by U.S. prosecutors and the New York Attorney General into transactions that occurred in the run-up to the subprime mortgage crisis.

Wall Street has been rocked over the past month since the U.S. Securities and Exchange Commission sued Goldman Sachs Group Inc, accusing the firm of civil fraud in connection with its marketing of a subprime mortgage product.

The probes have added fuel to legislative efforts to bring reform to Wall Street. The proposals from Washington could affect how firms like Morgan Stanley do business in the future.

Gorman rebuked the characterization by some that the regulatory debate is a "battle" between Wall Street and Main Street.

"We all have the same goal," he said. (Reporting by Steve Eder, editing by Gerald E. McCormick)