Merrill/14"/dt1st/mark2nd

By JASON BOOTH

Staff Reporter

Layoffs at Merrill Lynch & Co. may be sending shock waves through New York, but so far there is little fear of such sweeping layoffs locally.

Because Los Angeles is not considered a hub of financial services firms, there is less likely to be excess staff in local offices, say industry insiders. And since most of the firms that operate here are regionally focused, they will less likely feel the effects of financial turmoil elsewhere.

"The Southern California economy remains pretty strong," said Thomas Weinberger, executive vice president and director of investment banking at Sutro & Co. "So you wouldn't expect to see too many cutbacks."

Even Merrill Lynch, which is cutting 3,400 jobs worldwide, 1,500 of which will be in New York, says it is not planning significant layoffs in Los Angeles.

"There will be little or no impact in Los Angeles," said spokeswoman Bobby Collins. "The lion's share of the operations in L.A. are in the retail side of the business, which continues to do quite well."

Retail operations consist primarily of brokers and others who offer financial advice areas that will be in demand regardless of how the market performs. And because investment advisors make most of their money through commission, they are less of a financial burden on their employers, and less likely to be handed pink slips.

"Most of the cuts are centered on fixed income and emerging markets," said a locally based senior Merrill executive. "And there is less of that in Los Angeles."

One Merrill Lynch department that had seen a slowdown locally is investment banking, he said. But as the department started cutting back on financing work, it shifted its focus toward mergers and acquisitions.

Industry insiders suspect that Merrill won't be the only firm to let people go, in Los Angeles as well as New York.

"I think you might start to see some of the New York firms trim what they do on the West a bit," said Michael Gardner, a managing director at Wedbush Morgan Securities. He said the areas most likely to see cuts are equity trading, investment banking and equity research.

As long as retail investors remain active in the market, though, the cutbacks locally should be limited, Gardner said.

So far, the only local firm that has disclosed layoff plans is Jefferies & Co. Inc., a leading player in the high-yield debt market that has been hit particularly hard by the recent market downturn. Jefferies President Mike Klowden said the company will be letting people go on a case-by-case basis.

But firms that focus their business on California and the West such as Van Kasper & Co., Wedbush Morgan and Sutro say they are still hiring and some even hint that the Wall Street cuts might provide an opportunity to bring on board new talent.

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