UBS Slashes Equity Sales Jobs

Swiss banking giant UBS UBS is beginning to make the job cuts it announced after posting a big loss and writedown reported earlier this week, sources in its Stamford, Conn., office say.

As many as 400 institutional equity salespeople and a handful in the structured insurance products team were fired this week, the sources say. The bloodbath comes as UBS has struggled under mountains of bad investments and reported a first-quarter net loss of $10.9 billion and a $19.5 billion writedown.

UBS said earlier this week that it would slash up to 5,500 jobs in the coming months, including some 2,600 in the investment banking unit. A spokeswoman declined to comment on cuts in specific locations Friday.

While layoffs were expected, some insiders expressed surprised at the areas in which the cuts came, considering that it was the mortgage investments and auction rate securities products that caused most of the damage. Recently the bank informed customers that held auction rate products -- thought to be as good as cash -- that the securities were basically illiquid. Those accounts were frozen, infuriating customers.

And to add to its problems, the Justice Department is investigating whether its bankers helped wealthy Americans evade paying income tax on their investments, UBS said in a filing. "In particular, DOJ is examining whether certain U.S. clients sought, with the assistance of UBS client advisors, to evade their U.S. tax obligations by avoiding restrictions on their securities investments," the filing said.

The layoffs come at a difficult time to be looking for work in the financial sector. Bear Stearns BSC also began delivering pink slips this week. Morgan Stanley MS said it was dumping 5% of its employees and Lehman BrothersLEH was showing 4,900 to the door.