Layoffs at Wall Street Firms Begin to Reach Senior Levels


It is widely known that Wall Street firms have been cutting jobs since the financial crisis. Recently, Goldman Sachs began laying off upper middle-tier personnel, such as managing directors. Managing directors are compensated at levels below “partnership managing directors” at Goldman (the equivalent of “senior managing directors” at other firms), but above the junior vice president and associate level. John Carney of CNBC considers these job cuts to be a new kind of deleveraging that will occur at every Wall Street firm (“Wall Street’s (Other) Great Deleveraging,”

The upper middle-tier managing directors earn $500,000 per year at Goldman, according to the article. In good times, Carney writes, they are considered as “human capital” but in bad times like these, they are regarded as “human debt,” and constitute a drain on profits for the senior/partner level managing directors.

One reason for this, according to Carney, is that the compensation structure has moved away from bonuses, which can simply be slashed in bad times, to salaries, which are more like debt service obligations, and equity, which firms consider to be undervalued and will be costly if prices rise in the future.

In any event, the axe is eliminating senior Wall Street personnel, a trend that Carney expects to continue. This will likely lead to an increase in the amount of employment-related litigation, and the setting up of investment advisory firms, as laid off managing directors come to grips with their situations.

Page Perry has represented middle and senior level associated persons in a wide variety of employment law matters. Page Perry attorneys have successfully handled employment law disputes involving employee bonuses and loans, constructive termination, restrictive covenants and non-compete agreements, confidentiality agreements, stock option agreements, age, race and gender discrimination, and severance packages.

In the past several years, the firm has won arbitration awards for clients in employment disputes in the amounts of $1.7 and $3.9 million.

In addition, Page Perry has an active regulatory and compliance practice, which advises investment advisors and broker-dealers with respect to issues involving formation, regulation, reporting, advertising, supervision, and policies and procedures.

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