The exit doors have swung open at

Oppenheimer & Co.

(OPY) - Get Report

and dozens of its top earners have fled the Toronto-based brokerage to other Wall Street firms over the past few months.

The latest high-profile defection occurred two weeks ago when Frank James, the former manager of Oppenheimer's branch in San Francisco, jumped to

Bear Stearns

( BSC). James, who has 40 years of experience in the securities industry, is relocating to Chicago to oversee Bear Stearns' Midwestern brokerage operation.

Bear Stearns and

Citigroup

(C) - Get Report

have been the most active in scooping up former Oppenheimer brokers with long lists of wealthy clients. Bear Stearns alone has hired nearly a dozen of Oppenheimer's top-earning brokers over the last year.

The exodus at Oppenheimer comes at a dicey time for the firm, which finds one of its few remaining top-earning brokers, Michael Sassano, under siege over his

possible role in the mutual fund trading scandal.

Securities regulators have a close eye on Sassano because he has ties to a number of the hedge funds and other brokers who've been implicated in the burgeoning scandal involving allegations of improper trading.

Sassano, like many of the brokers who've been fleeing Oppenheimer, used to be an employee of

Canadian Imperial Bank of Commerce

(BCM) - Get Report

, which sold its Oppenheimer brokerage division to

Fahnestock-Viner Holdings

early last year for about $241 million. In September, Fahnestock, long an industry also-ran, junked its name in favor of the Oppenheimer brand, which has a more storied history.

But former Oppenheimer brokers and Wall Street recruiters said the name change has been little more than a bait-and-switch. The current Oppenheimer hasn't resembled the firm once led by legendary Wall Street investor Leon Levy, nor even the firm run by CIBC. (Oppenheimer is not associated with

Oppenheimer Funds

, although at one time they were part of the same company.)

"CIBC had marketed Oppenheimer to wealthy people, but when Fahnestock took over they didn't have the ability to cater to those top brokers," said Carri Degenhardt-Burke, a Wall Street recruiter. "The old Fahnestock is not up to the job of running a high-end brokerage.''

Several former Oppenheimer brokers cited low pay, poor morale and archaic technology as the main reasons they fled. The former brokers said the firm's internal computers are slow in executing stock trades and prone to errors. In the third quarter of last year, the brokers said many customers received quarterly statements that erroneously listed them as having zero balances. The same computer system also led to delays in brokers getting paid.

One former broker, who didn't want to be identified, said the technology used by his current firm is light years ahead of the one he was forced to use at Oppenheimer following the merger. "It's the difference between playing Pong and playing the latest version of PlayStation 3," he said.

The former brokers principally blamed Oppenheimer Chairman and CEO Albert "Bud" Lowenthal for the defections, claiming the man who owns 50% of the company's voting stock is trying to run a brokerage on the cheap. One former broker said of Lowenthal, "this guy has just pushed people out the door."

Officials at Oppenheimer, which is incorporated in Toronto but keeps most of its offices in New York, did not return several telephone calls. Inquiries made to Lowenthal's office were directed to Robert Neuhoff, the firm's executive vice president. Neuhoff wasn't available to comment.

Former brokers said they believe Fahnestock, which had to put only $14 million in cash down to finance the debt-laden deal, wanted Oppeheimer mainly for its name and a quick way to boost revenue. The tactic worked in the short term, thanks largely to the bull market, as 2003 revenue more than doubled to $689 million and earnings quadrupled to $29.8 million.

But a longer-term view of Oppenheimer's current management team paints a different picture of its acquisition prowess. Last summer, a

New York Stock Exchange

hearing panel slapped a $500,000 fine on Fahnestock stemming from issues that occurred with its 1997 acquisition of

First of Michigan

, a small regional brokerage firm. The hearing panel, which also censured Lowenthal, found that the firm had incurred numerous problems in transferring accounts and keeping records of mutual fund transactions.

In recent years, much of the firm's growth has come through its acquisitions of regional and niche brokerages. In 2001, it acquired

Josephthal & Co.

A year later, it bought

BuyandHold Securities

. The firm now has more than 1,100 brokers in 22 states.

Indeed, the firm even has managed to turn its history of acquisitions to its advantage by suing rivals for raiding its staff.

Earlier this year, an

NASD

arbitration panel ordered

Ryan Beck

, a division of

BankAtlantic

(BBX) - Get Report

, to pay Oppenheimer $2.2 million in damages for allegedly enticing some two dozen Josephthal brokers to jump ship soon after that merger. In 2003, the old Fahnestock received $22 million from another brokerage that allegedly raided the staff of First of Michigan following its acquisition in 1997.

Some of the former Oppenheimer brokers who've been leaving for other firms the past few months said they expect Lowenthal's management team to pursue similar litigation against their current employers.