Prudential Securities'

acquisition of California technology banking boutique

Volpe Brown Whelan

, already plagued by defections and reorganizations, took another hit this week as two top-level Volpe executives jumped ship.

Jim Feuille (pronounced FOY), president of the unit, known as

Prudential Volpe Technology Group

, and Peter Rogers, head of technology research, resigned Tuesday, according to an insider at the firm.

The pair's departure puts pressure on Prudential to secure the rest of the former Volpe troops in the hope of making some headway in West Coast tech banking, an area in which it has yet to prosper, like rivals

Goldman Sachs

(GS) - Get Report

and

Morgan Stanley Dean Witter

(MWD)

.

In a last-minute effort to resolve differences between former Volpe troops and their new parent company, Feuille proposed a solution under which the Pru Volpe unit would operate as an independent entity and be half-owned by employees and half-owned by Prudential. Prudential found the half-ownership condition unacceptable and rebuffed the offer.

"This comes out of the blue," says Sandy Robertson, co-founder of

Robertson Stephens

, where he had worked with both Feuille and Rogers. After its initial problems, Pru Volpe had seemed to stabilize, and was getting its name on some deals, Robertson says, adding that he attributed its success to the work of Feuille, Rogers and founder Thomas Volpe.

"This is going to hurt them," he says.

In an internal memo Wednesday to the Pru Volpe troops from Vin Pica, Pru's president of capital finance, Pica confirmed the departures. In the memo, a copy of which was obtained by

TheStreet.com

, Pica also states, "we are firmly committed to the Prudential Volpe Technology Group concept and plan to make it a technology powerhouse." A Pru spokeswoman declined further comment.

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Prudential bought Volpe Brown in

December for a price rumored to be around $180 million. In the immediate aftermath of the deal, about 15% of Volpe Brown's 235 employees left, some by choice, some by Pru's decree. At the time, Prudential attributed the exodus to the "normal" course of events after a merger.

The departures of Feuille and Rogers, however, considerably ups the ante on what constitutes "normal," and raises questions about what Prudential has left to show approximately three months after it spent a rumored $180 million to acquire the San Francisco-based investment boutique.

Feuille and Rogers ostensibly were running the unit following a management shake-up in January that took the day-to-day responsibilities away from Volpe and partner Robert Whelan. Volpe and Whelan were originally picked as the unit's top managers, but are now focusing on long-term and new enterprise strategy, Prudential said in January.

The resignations by Feuille and Rogers come after the outflow of analysts and technology bankers -- including Internet analyst Charles Finnie -- as well as many traders.

Last month, 22 traders left Pru Volpe to join

W.R. Hambrecht

. The defections of Feuille and Rogers could lead to a similar exodus among the remaining investment banking employees.

"Feuille was a reason people were sticking around," says one former Volpe Brown employee, who requested anonymity. "They already had a skeleton screw. The old saying about how your capital walks out the door every day is so true."

After the first group left, Prudential was forced to restructure its contract with the remaining employees in January, according to the insider, to include autonomy, profit-sharing, participation in a venture fund and numerous other perks.

What led to Feuille's and Roger's departures, however, were delays in getting that contract in writing over the past two months, sources say. That, and Pru's continued insistence that some Volpe Brown departments, such as sales and trading, distribution and research, be folded into the parent firm.

"Pru's handling of the deal has been a disaster," says another former Volpe employee.

West Coast finance types may be feeling they've seen this movie before -- specifically when

NationsBank

bought what was then

Montgomery Securities

in 1997. NationsBank then merged with

Bank of America

(BAC) - Get Report

in 1998 and the resulting tumult at the Montgomery unit led to a

mass exodus from that firm.

At this point, it appears that Prudential's attempt to secure a West Coast beachhead in the burgeoning market for technology underwriting has been a total bust.

"There's no way the Volpe side of Prudential could win a deal right now," the former Volpe employee says. "They don't have the infrastructure to pitch or win a deal."