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September 22, 2005

Wells Fargo Ditches Institutional Equities

By Peter Chapman

Wells Fargo Securities, three years into its effort to become a top player in growth stocks, has pulled the plug on its research, sales and trading operations. The unit of Wells Fargo commercial bank, which at its peak employed nearly 80 staffers in equities, blamed declining commissions and margins.

"In this changing environment," John Hullar, a Wells Fargo Securities senior managing director, said in a statement, "we're simply not able to earn the return on our investment that we need to grow this business." Hullar was formerly president and CEO of Wells Fargo Securities.

The closing affected four sales traders in Boston, two in New York, and seven in San Francisco, as well as 12 position traders there, according to one former employee. Layoffs, she said, were expected, but not a total shut down. The firm had hired three new research salesmen in March, the trader said. That would indicate that the decision to close was a recent one. Another former trader said that turnover was common after each semi-annual bonus check. He added the bank never seemed fully behind the equities effort.

In 2002, Wells made a string of key hires in an effort to launch an institutional equities operation nearly from scratch. Key hires on the trading side included John Caruana as head of trading and Mike Perrella, head of sales trading. At its peak, the trading group numbered nearly 30 professionals with desks in San Francisco, Portland, New York and Boston.

The brokerage's mission was to become a recognized name in the research and trading of growth stocks in the technology, consumer, health care and financial services sectors. Despite its efforts, Wells Fargo never attained the status of that of the nation's top growth shops.