Smith Barney stays atop Southland securities industry.

Merrill Lynch takes No. 2 spot on List with stellar growth

Standing like the Colossus of Rhodes above all other securities firms in Los Angeles County in 1994 is Smith Barney Inc., with its army of 615 stockbrokers in 18 branch offices, according to this week's List of securities brokerage firms.

Smith Barney has long been a major presence in Los Angeles, but its 1993 acquisition of Shearson Lehman Bros. catapulted it above even Merrill Lynch Pierce Fenner & Smith and Dean Witter, which had been the region's largest brokerages.

Last year Smith Barney also had 615 brokers (after the merger with Shearson), and so the brokerage, while the largest, is apparently holding steady rather than growing.

(Local representatives of New York-based Smith Barney are not allowed to talk to the press, and so no one at the brokerage was available for comment.)

In contrast, the No. 2 brokerage on this year's List, Merrill Lynch, is up to 469 brokers, a full 42.6 percent gain from a year ago. Why the stellar growth?

"There have been no acquisitions, but we have had a number of brokers leave other firms to come here, and our brokers do not leave," said Rod Hagenbuch, senior resident vice president at Merrill Lynch. "And we still develop most of our own brokers. Still, we have a lower market share here than we do in most other major cities, so I expect us to grow quite a bit in coming years."

Unlike several other brokerages, Merrill Lynch has not been tarnished in recent years by stories of broker or management misdeeds.

"We have the toughest compliance (rules and monitoring to ensure compliance with rules) in the industry, and we plan to keep it that way," said Hagenbuch. "We stress, in our training of brokers, that no bottom line is worth more than the firm's reputation."

The biggest among the home-grown and independent brokerages is Torrance-based Financial Network Investment Corp., founded in 1983. No. 5-ranked Financial Network reported it has 261 brokers in Los Angeles County, in 11 branches. A year ago it reported 275 brokers, so the firm is a bit smaller this year than last.

The second-biggest of the local outfits is discount brokerage Kennedy Cabot & Co. of Beverly Hills, with 150 brokers. It was founded by David Paul Kane, who named the firm after the famous Democratic and Republican families in order to attract clients of both political stripes.

Third-biggest among the home-grown brokerages is Crowell Weedon & Co., in downtown Los Angeles. Crowell Weedon, in business 62 years, has 140 brokers in eight branch offices, and is managed by family scion Donald Crowell, son of the founder. Last year Crowell Weedon reported 142 brokers.

The fourth-largest home-grown independent is Santa Monica-based Drake Capital Securities, an outfit started by Chairman Joseph Di Lillo in 1985, and which now boasts 54 brokers. Drake Securities specializes in managing money for high net worth individuals and institutions and investing in unusual or special situations.

(The old Bateman Eichler, Hill Richards securities brokerage, founded in 1931, was taken over by Chicago-based Kemper Securities Inc., part of the Kemper insurance empire, and so is no longer considered an independent local brokerage.)

Bouncing around on The List compared with last year is the Century City-based Baraban Securities, founded in 1978.

The rankings are by number of full-time brokers employed. This year, Baraban reported 70 full-time brokers, and 400 part-time brokers, and is ranked 16th. Last year, it reported 500 full-time brokers and posted in No. 2.