eFC Briefing: Merrill Freezes While Boutiques Feast

Merrill Lynch froze hiring through year-end. Meanwhile, boutique banks scoop up talent from large institutions. Hedge funds are deluged with candidates. Mutual fund firm Ariel laid off 18 people, 20 percent of its staff.

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Merrill Lynch froze hiring, including replacement hires, for the remainder of 2008, according to media reports. Retail brokers are exempt, but all other hires require prior approval from a member of Merrill's management committee. An internal memo quoted by Bloomberg News stressed the need to manage expenses prudently and said the management committee is working on plans that will determine hiring for 2009. Merrill's freeze contrasts with Morgan Stanley, which said July 31 that it's plowing as much as 100 percent of the $1 billion it saved by cutting 4,800 jobs earlier this year, into selective new hiring.

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Trading up for talent, banking boutiques are feasting on Wall Street's castaways. A recent Reuters story points to Thomas Weisel Partners, Wedbush Morgan Securities, and Evercore Partners as boutique firms engaging in opportunistic hiring lately. San Francisco-based investment bank Thomas Weisel Partners has hired former employees of UBS, Bank of America, Merrill and Bear Stearns in recent months. Its president told Reuters that Thomas Weisel has been "a direct beneficiary of the dislocations" in the larger banks. Still, Weisel cut its own workforce by 13 percent bak in April.

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Getting hired by a hedge fund is becoming even more difficult as laid-off Wall Streeters flock to the sector because of its reputation as a more stable place to work. In Boston, hiring continues at a brisk pace for jobs ranging from portfolio managers to entry-level positions. Salaries remain strong, and quant roles remain difficult to fill. "There is a ton of qualified candidates," says one hedge fund recruiter. "There are a lot of rock stars out there and they are competing against other rock stars." Companies are particularly eager to hire candidates with relevant experience and a Ph.D. in the hard sciences, who combine quant skills, programming skills and strong communications skills. For supporting roles, research, due diligence, compliance are currently seeing the greatest demand.

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Chicago-based mutual fund firm Ariel Investments laid off 18 employees or about 20 percent of its staff, citing a need to run a leaner operation amid difficult market conditions for its value equity style. Pensions & Investments reports that the casualties include two of Ariel's nine technology staffers, two research analysts and a position responsible for sponsorships. One of the laid-off researchers, Robert Goldsborough, had just been appointed to the firm's investment committee. Ariel President Mellody L. Hobson described the step as a necessary belt-tightening measure amid "a brutal bear market."

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Ex-Bear Stearns executives continue to land high-level roles with hedge funds. Capital Z Asset Management said late last month it hired James M. Marrone, Jr. as chief marketing officer, a new role designed to strengthen sales and hedge fund sponsor services. Marrone led corporate institutional sales efforts at Bear Stearns Asset Management. Meanwhile, former Bear Stearns convertible fund manager Loren Griffin joined Cargill's hedge fund subsidiary, Black River Asset Management LLC, as head of U.S. convertibles, according to Hedge Fund Manager Week.

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Bankers and traders no longer needed on Wall Street increasingly are being given another option - move overseas. Big investment banks are moving both key executives and some of their most junior employees to Asia, the Middle East, Europe and Latin America, the New York Times reports. Some bankers are getting opportunities they've dreamed of, while banks benefit by keeping key employees they might otherwise have laid off. A separate New York Times story details how belt-tightening on Wall Street is driving business to Indian firms like Copal Partners that provide research, back-office and other support functions. This trend began several years ago but is now migrating to more sophisticated levels of research - although senior sell-side analysts whose name goes on research reports are expected to remain in the West.