Investment Fraud Lawyer Blog

If you work on Wall Street, your days of gainful employment may be numbered. Job security on Wall Street is fast becoming a thing of the past. Josh Fineman and Deirdre Bolton of Bloomberg.com reported today that executive recruiters claim that the world’s biggest financial firms may cut as many as 175,000 jobs by this time next year. These firms have already announced cuts of more than 83,000 jobs since July 2007, and recruiters fear that the job losses will exceed those from the technology collapse market slump of 2000 – 2003.

Firms have incurred write-downs of almost $400 billion because of mortgage defaults. Write-downs of this magnitude mean correspondingly large job losses, especially on Wall Street, which has a tendency to over-hire in up markets and over-fire in down markets.

Continue reading "175,000 Wall Street Jobs May Be Going, Going, Gone" »

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Posted In: Employment Issues

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A few minutes ago, Matthew Goldstein at BusinessWeek.com reported that one of Citigroup's top brokers, Richard Zinman, has left for Credit Suisse. Barron's magazine recently ranked Zinman as the nation's 6th-largest broker in terms of assets under management, revenues generated, and customer satisfaction.

According to BusinessWeek, Zinman and his team of junior brokers left Citigroup's wealth managment group in part because so many of his wealthy clients had lost millions in Citi-managed hedge funds, notably Falcon Strategies and ASTA/MAT bond funds.

The manager of those hedge funds, Reaz Islam, departed Citigroup recently as well. He had been with the firm for nearly 18 years.

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Posted In: Citigroup Hedge Funds , Citigroup/Smith Barney , Employment Issues , Subprime Mortgage & Collateralized Debt Obligation Problems

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According to Charles Gasparino of CNBC.com, JP Morgan Chase has launched a major round of layoffs in the firm's highly regarded investment banking department. In an attempt to downsize the unit amidst a massive slowdown in business, at least 200 executives – most of them junior bankers – were laid off last week. The firm says that the layoffs are unrelated to the firm's recent purchase of Bear Stearns, but it has also said that it will cut JPMorgan Chase people to make room for Bear Stearns executives it wants to keep.

JP Morgan has as many as 1,000 executives in the investment-banking department, which translates to a cut of at least 20 percent. While most Wall Street firms have been cutting between 5 and 10 percent of their staff, cuts at JP Morgan are comparably deeper even though the bank has not faltered as much as other firms with losses related to investments in subprime securities.

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Posted In: Employment Issues , J. P. Morgan Chase , Subprime Mortgage & Collateralized Debt Obligation Problems

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Layoffs in the financial industry come with almost every downturn. The latest round of such layoffs, however, is different. In fact, it is eerily quiet as some bosses now hardly say a word after people are fired, according to an article by reporters Louise Story and Eric Dash in the May 16th New York Times.

At Citigroup, Goldman Sachs and Morgan Stanley, the first clue that someone is gone can be the return of an email message from a former colleague’s inactivated corporate e-mail address.

Since last summer, banks worldwide have announced plans to cut 65,000 jobs. Exactly how many employees have been or will be eliminated, however, remains unclear. In the past, Wall Street typically made sharp reductions in their workforce all at once. After the 1987 stock market crash, for example, employees were herded into conference rooms and dismissed as a group. Today, companies are making many small cuts over the course of weeks and even months. Employees who have lost jobs and others vying to hold them say that banks are keeping employees in the dark about the size and timing of layoffs.

Continue reading "Stealth Layoffs Hit Wall Street" »

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Posted In: Bank of America , Bear Stearns , Brokerage Firms , Citigroup/Smith Barney , Employment Issues , Goldman Sachs , J. P. Morgan Chase , Lehman Brothers , Merrill Lynch , Morgan Stanley

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Wall Street continues to shed jobs at breakneck speed, and financial firm employees cannot help but wonder how many heads will ultimately roll. The number of announced layoffs increases weekly. According to an article in The Wall Street Journal on May 10, more than 23,000 financial job cuts were announced in April. That brings the total announced job cuts for the first four months of 2008 to 49,825 –- nearly as many as the job cuts announced in all of 2007.

Lehman Brothers is expected to announce this week that it is eliminating about 5% of its workforce – or 1,425 jobs – on top of a previously announced 5% job cut. By the end of June, Morgan Stanley plans to cut 1,500 more jobs to bring its total layoffs to 4,500 or about 10% of its workforce. UBS announced last week that it will cut 5,500 jobs, including 2,600 investment bankers. Finally, no one knows how many Bear Stearns employees will be laid off once JPMorgan Chase acquires that firm.

In this uncertain climate, employees on Wall Street need to protect themselves. Even if your firm has a reputation of protecting its own, once you are targeted for layoff you are no longer within that circle of protection.

Continue reading "With 50,000 Layoffs So Far This Year, Wall Street Employees Must Protect Themselves" »

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According to a published report in Bloomberg.com, Morgan Stanley plans to lay off up to five percent of its work force during the remainder of 2008. These layoffs were driven by Morgan Stanley's recently announced quarterly losses, which were the first in its history as of a publicly-traded company. Morgan Stanley posted a $3.6 billion loss in the quarter ending March 31, 2008. The firm has already laid off 3,000 workers since October 2006.

Morgan Stanley CEO John Mack predicted in April that the credit crisis caused by the subprime mortgage and real estate market collapse would last "a couple of quarters" longer and that it was going to be "a difficult year for the Street."

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Posted In: Employment Issues , Market Developments , Morgan Stanley

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After experiencing $17.3 billion in losses in the first quarter from its investment-banking unit, UBS announced on May 6 that it plans to cut 5,500 jobs, approximately half of which will come from its securities division. According to a report on Bloomberg.com, UBS said that its clients withdrew 12.2 billion dollars in assets more than they deposited in UBS's wealth management and asset management divisions during the most recent quarter. The most recent UBS job cuts are on top of approximately 48,000 other layoffs announced by the world's biggest banks and securities firms in the past year, mostly resulting from write downs and losses from the US subprime crisis.

Continue reading "UBS Will Cut 5500 More Jobs" »

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Posted In: Employment Issues , Market Developments , UBS

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Wall Street firms continue to make massive job cuts in the aftermath of the subprime securities crisis and resulting credit crunch. Unfortunately, a lot more cuts may be on the horizon. Even those who are fortunate enough to keep their jobs are experiencing reductions in compensation.

Mark Zandi, chief economist and co-founder of research firm Moody's Economy.com said, "The job prospects for Wall Street through this time next year are about as bad as for any industry in the country. And people who hang on to jobs will suffer through less compensation. The Wall Street job engine won't be going again until sometime in the next decade."

Continue reading ""Pink Slips" Flood Wall Street" »

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Kenneth Moelis, the former head of UBS’ investment bank, said recently that Wall Street firms may have to eliminate has many as 35 percent of jobs as leveraged lending dwindles and the pace of mergers and acquisitions slows. Wall Street banks hit by mortgage losses and writedowns have already cut more than 34,000 jobs over the past nine months, the most since the dot-com boom ended in 2001.

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The New Jersey Supreme Court will decide whether the forfeiture provision in Smith Barney’s incentive compensation plan violates New Jersey’s wage-and-hour law. A class action brought by two Smith Barney brokers, Melvin Rosen and James Fox, alleges that the plan penalizes participants who leave the company before they are vested in violation of the public policy underlying the state’s wage-and-hour law.

In 1989, Smith Barney Inc. instituted the plan because of high stockbroker turnover. Brokers could elect to have part of their compensation diverted to purchase restricted shares of stock in Smith Barney's parent company, Citigroup Inc., at a price 25% below market price. These purchases, however, did not fully vest for two years. Participants could not sell their shares before they vested though they could receive dividends and exercise voting rights. Employees who resigned or who were let go prior to vesting forfeited their unvested stock. Class plaintiffs Rosen and Fox forfeited unvested stock under the plan when they resigned.

Continue reading "Does Broker Compensation Plan Violate State Law?" »

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Thomas P. Fitzgerald, the former Chief Operating Officer of H&R Block Financial Advisors, Inc. of Detroit, Michigan, has been awarded $3.9 million in damages based upon the denial of promised employment compensation by a 3-member panel of arbitrators appointed by the Financial Industry Regulatory Authority (FINRA). Fitzgerald claimed the company refused to pay certain compensation and severance benefits it owed him by contract because he refused to sign a two-year non-compete agreement. The contract was presented to Mr. Fitzgerald as a retention package designed to entice him to remain with the company, then known as OLDE Discount Brokerage, Inc., when it was acquired by H&R Block. Several years later, when H&R Block Financial Advisors attempted to get Mr. Fitzgerald to sign a non-compete agreement, he refused, but continued to work for the company for an additional two-and-a-half years under the existing contract before his employment ended. The company then refused to pay his contractual benefits because he would not sign the proposed noncompete agreement.

The arbitration was held in Southfield, Michigan in November 2007. Page Perry partners J. Boyd Page, J. Steven Parker and James A. Nofi represented Mr. Fitzgerald.

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Posted In: Employment Issues , Securities Arbitration

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Gregory A. Fisher, a former Senior Managing Director at Bear Stearns office in Atlanta, Georgia, has been awarded $1.625 million in damages based on a breach by Bear Stearns of its severance agreement with Fisher. A three-member panel of arbitrators appointed by the Financial industry Regulatory Authority (FINRA) issued the award.

Fisher claimed that Bear Stearns forced him out in March 2005 because it was no longer interested in servicing his clients, which included financial institutions in the Caribbean and Latin America. As part of the severance agreement it negotiated with Fisher, Bear Stearns agreed not to solicit certain of fisher’s clients. Upon Fisher's departure, however, Bear Stearns immediately reassigned some of Fisher’s largest accounts and began soliciting their business.

Continue reading "FINRA Arbitration Panel Awards Broker $1.6 Million For Breach Of Severance Agreement" »

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Posted In: Bear Stearns , Employment Issues , Securities Arbitration

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