Morgan Stanley Dean Witter & Co. denied a published report saying the brokerage is mulling laying off 1,000 brokers.
The Wall Street Journal, citing a source familiar with the matter, reported Wednesday that Morgan Stanley is considering the cuts, which amount to 7 percent of its brokerage force, as part of a plan to slash nearly $1 billion in costs.
In a statement, the Morgan Stanley said it "has no plans to decrease the number of its individual investor group financial advisers."
The statement also said Morgan Stanley will train 2,500 new financial advisers and recruit experienced brokers to increase its market share.
Company president Robert Scott said last month that Morgan Stanley managers are cutting consultant expenses, reducing non-compensation costs such as travel while reviewing their personnel rosters for possible job eliminations.
The rumblings of cost-cutting at the brokerage came as Federal Reserve chairman Alan Greenspan testified on Capitol Hill, warning that U.S. prosperity could be jeopardized if lawmakers were to give in to calls to erect protectionist trade barriers.
Morgan Stanley, which only this week announced it was dropping "Dean Witter" from its corporate name, is the nation's third largest securities firm.
The Journal noted that the layoffs at Morgan Stanley would be "significant" because many of Wall Street's heavyweight firms have been reluctant to make cuts in their brokerage staff, for fear of getting caught short if the market were to recover.
Charles Schwab Corp. followed that model two weeks ago when it announced plans to slash as many as 3,400 jobs but said its cuts wouldn't be made among brokerage staff.
Merrill Lynch & Co. also indicated it would stay away from the brokerage department as it said it might lay off 150 people, all in the investment-banking division.
But some observers say it's a trend that won't last.
"Despite what the Wall Street firms are saying, layoffs are the rule - not the exception," says Bear Stearns securities industry analyst Amy Butte, in an interview with the Journal.
Bear Stearns said last month that it would eliminate about 400 jobs, in mostly support areas.
Another major player in financial services, Citigroup, has laid off hundreds of workers amid stock market jitters.
The layoffs, which began Tuesday, are mainly in support areas such as operations and technology in the United States and Europe, according to Arda Nazerian, a spokeswoman for Salomon Smith Barney, Citigroup's brokerage unit.
She says some of the cuts will be from the investment banking and trading divisions but declined to offer specific numbers.
Nazerian also says Salomon Smith Barney hired three top traders away from competitors this week, and the investment bank still expected to end the year with more employees than it had at the start.
The layoffs came week after Michael Carpenter, who oversees the businesses, warned in a memo that "we must respond to unfavorable market conditions by being extraordinarily disciplined about the management of our headcount and expenses."
Shares of Morgan Stanley were off $3.85, or nearly 8 percent, to close at $45.26 Wednesday on the New York Stock Exchange.
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