Shearson Will Cut Hundreds of Jobs Soon

Shearson Lehman Hutton Inc. will lay off several hundred workers over the next few weeks due to the recent slowdown in the financial markets, the brokerage company said Tuesday.

The cuts would be the largest since the slew of layoffs that followed the October, 1987, market crash.

Industry analysts predicted that a new round of staff cuts will occur on Wall Street due to recent sluggish retail brokerage activity and a slowdown in leveraged buyouts.

However, other major brokerages said no such cuts are in the works.

Brokerages are likely to report lower trading profit for the fourth quarter as small investors remain on the sidelines. Investors have been jittery following the Friday the 13th market plunge last month and subsequent market volatility.

A memo circulated to Shearson employees Monday said the cutback will mainly affect New York employees and reflects the slowdown in market activity.

Industry sources estimated that about 800 Shearson employees would receive layoff notices. Shearson’s work force worldwide totals about 38,500.

Most brokerages began tightening their operations after the October, 1987, crash, when they let go an estimated 17,000 employees.

One analyst noted that this October was a poor month for the securities business and estimated that up to 7,000 workers industrywide could be laid off by mid-1990.

This year’s Oct. 13 market selloff was initiated on news that a financing deal for a takeover bid had collapsed. The transaction involved a UAL Corp. pilot-management group that hoped to buy out the United Airlines parent.

The junk bond market, a source of funds for many highly leveraged takeovers, has also been troubled. Prices of lower grade high-yield, high-risk bonds have fallen since the summer, when some companies ran into problems meeting interest payments.

The Shearson cutback also reflects consolidation of its office facilities in New York as a number of Shearson employees are about to move to a new office building in lower Manhattan. The new facility, known as Shearson Lehman Hutton Plaza, is six blocks north of its World Financial Center headquarters.

The memo to employees said the cutbacks would be in “selected areas.”

The layoffs were not likely to have a material financial impact on the company, one source said.