In a move that smacks of corporate retribution, Wells Fargo & Co. has fired 175 employees of newly acquired Wachovia Corp. who once worked at the San Francisco-based bank.
The 175 affected employees — including some brokers — represent about 9% of the 2,000 workers who made the return trip. At yearend, Wells Fargo completed its acquisition of Wachovia of Charlotte, N.C., outmaneuvering rival suitor Citigroup Inc. of New York for the troubled bank.
Among those fired were a handful of representatives and advisers at St. Louis-based Wachovia Securities LLC. The cutting of brokers defies one of the fundamental tenets of the securities business: High-producing reps and advisers are considered untouchable in mergers because they are the backbone and revenue producers of the firm that has been acquired.
In several cases, those advisers were either told directly or sent letters Dec. 24 that they wouldn't be retained, sources said.
Among those dismissed were Kent Elliot and Matthew Schmitt, a $1.7 million team in Roseville, Calif. On Jan. 5, they joined Robert W. Baird & Co. Inc. of Milwaukee.
Mr. Schmitt declined to comment last week about the circumstances around the departure.
Before shareholders approved the merger of the two banks, Wells created a "do not hire" list of the employees, according to several sources inside and outside the firm. That list was dubbed the "conflict employee summary," according to one source.
Melissa Murray, a spokeswoman for the bank, said she has no knowledge of such a list. The employees who were dismissed didn't meet certain "eligibility requirements," she said.
Initially, there was confusion at Wells Fargo over how many Wachovia employees had been let go.
Last Wednesday, InvestmentNews.com reported that close to 300 Wachovia employees weren't being retained, according to a Wachovia spokeswoman.
A day later, Ms. Murray said the correct figure was lower and that all the affected employees were given the opportunity to request a review of their eligibility requirements. As a result, many got their jobs back, she said.
So far, Wells hasn't made any other layoffs related to the merger.
On Dec. 31, Wells purchased Wachovia for $12.7 billion. The two initially agreed to the deal in October.
"Perhaps Wells didn't want them because they didn't show loyalty to Wells," said one attorney, who asked not to be identified.
The question is whether firing such employees is legal or just a matter of business ethics, another lawyer said.
"I think people are consistently surprised at how broad an employer's discretion is in some matters," said Andrew Oringer, a partner and co-head of the U.S. executive-compensation-and-benefits practice of New York-based White & Case LLP.
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