eFC Briefing: Combing the Wreckage

Another platoon of the newly jobless is set to flood Wall Street in the wake of Lehman's Chaper 11 filing and Merrill's acquisition by Bank of America.

Monday's bankruptcy filing by Lehman Brothers Holdings and the surprise deal for Bank of America to acquire Merrill Lynch will each trigger mass layoffs, Wall Street headhunters say. Although it's too soon to estimate how many jobs will be lost in the restructuring of Lehman and the absorption of Merrill, last weekend's stunning developments further reduce opportunities for most professionals to make a career move, in an industry that has been shrinking already. "In the short term, the employment picture is going to be ugly," said Jay Gaines, chief executive of headhunting firm Jay Gaines & Co. At Lehman, individual employees face dramatically different consequences, depending on which subsidiary they work for. Its asset management and broker-dealer subsidiaries weren't included in the parent company's Chapter 11 filing. At Merrill, Gaines indicated the heaviest job cuts could fall within the "infrastructure" area, where there is duplication with Bank of America.

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Neuberger Berman employees are nervous about what's next for their company, as parent Lehman Brothers' efforts to sell the money management firm continue in the wake of Lehman's bankruptcy filing. "The mood is tense," said one Neuberger portfolio manager. "Most of us are getting our news of what's happening on Wall Street from the TV, just like everyone else." Neuberger isn't included in the Lehman bankruptcy proceedings, and is expected to be sold. In August, numerous private equity firms reportedly expressed interest in Neuberger, which Lehman acquired in 2003. As at Bear Stearns and Lehman, many employees at Neuberger Berman were affected on a personal financial level as owners of Lehman Brothers stock. The portfolio manager confirmed that, since the acquisition, a portion of executive salaries has been paid in Lehman stock, some of it restricted.

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Employees at Merrill's sprawling campus in Hopewell, N.J., are cautiously optimistic about their future with Bank of America, saying their skills in investment banking and wealth management are needed by their new parent. One unnamed employee told the Times of Trenton he felt the purchase of Merrill by B of A was "a good thing. I don't think people are worried." Merrill Chief Executive John Thain reportedly told a conference call that he expects business as usual to continue through at least January.

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Citadel Investment Group hired Tobias Gehrke and Anita Nassar from Merrill Lynch as co-heads of international distribution and marketing. They will lead fundraising efforts in Europe, the Middle East, and Northern Africa.

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Royal Bank of Scotland said it hired Christiane Mandell from Bank of America as head of FX and local markets trading for the Americas, a new position based in Greenwich, Conn. Most recently, she led the global foreign exchange group at B of A.

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New York-area CPA firms are starting to feel the impact of contractions in the industries they service. "People are reluctant to staff up given the tentative nature of the economy," says Frank Fusaro, president of the Forum Group, a New York City-based recruiting and consulting firm.