has effectively shuttered one of nine regional offices in its clearing and stock processing operation.
The seven employees in Bear Stearns's Boca Raton, Fla., office learned of the firm's decision to dismiss them early Wednesday. A spokesman for Bear Stearns says the move is part of the firm's "ongoing efficiency efforts."
The layoffs in Bear Stearns' clearing division come about four months after the firm ousted three top executives for allegedly failing to follow firm policy on mutual fund trading. The executives were fired amid an ongoing regulatory investigation into Bear Stearns' role in clearing and processing improper mutual fund trades for dozens of small brokers and hedge funds that have been implicated in the far-reaching scandal.
A person close to Bear Stearns says the layoffs in the Boca Raton office are unrelated to the mutual fund investigation by the
Securities and Exchange Commission
and federal prosecutors, and that this is solely a cost-cutting move.
The employees in the Boca Raton office worked with either hedge funds or small brokerages that clear and process trades through Bear Stearns. Sources say the layoffs at Bear Stearns won't affect the handful of clearing customers that sublet space in the building from Bear Stearns.
Clearing is an arcane but crucial service on Wall Street in which a firm acts as a middleman for parties doing stock and bond transactions. The clearing divisions of big Wall Street firms like Bear are crucial to the hundreds of smaller brokerages that lack the financial resources and back-office muscle to make sure big sales of securities go off smoothly.
At Bear Stearns, clearing operations accounted for 13% of the firm's net revenue in 2003.
In its heyday, the Boca office was one of the more profitable for Bear Stearns' clearing group. But some say the Boca Raton office has fallen on hard times.