Newsday (August 08, 2001)
PaineWebber Shuts Office Says branch in Flushing was not as profitable as expected
By Bryan Virasami
PaineWebber, one of the country’s leading investment banking firms, recently closed its Flushing branch, a move that surprised many community leaders.
The departure shocked some local officals yesterday who recalled the company’s splashy 1998 arrival in Flushing.
“To say the least I’m concerned because anytime a financial institution has a problem or they close, that’s a problem because it’s a loss of money flow,” said Eugene Kelty, chairman of community Board 7 in Flushing.
PaineWebber spokesman Paul Marrone said yesterday that the 41-60 Main St. branch, with about eight employees, closed because it was not as profitable as expected.
“The firm was not as successful as we anticipated,” Marrone said.
The departure of the office came just as an arbitration complaint alleged three of the firm’s brokers abused the trust of eight Korean-American clients by charging excessive fees and made trades without their knowledge.
The brokers left the firm voluntarily and PaineWebber declined to discuss the case, according to the spokesman.
Fred Fu, president of the Flushing Chinese Business Association, said he realized the firm was gone when the sign came down. “Nobody knew until the sign disappeared,” Fu said yesterday.
Councilwoman Julia Harrison (D-Flushing) said she was shocked to learn the firm was gone and would have tried to keep them if she had known.
“We never heard from them, we didn’t have a chance to keep them,” she said.
In recent years, Flushing has been a major attraction for investment houses, a community with a large Asian population of savers. In some households, savings rates reach about 50 percent of income.
In 1998, the Federal Deposit Insurance Corp. reported that deposits in the Main Street area soared to $4.2 billion, a 44 percent jump from 1994, according to the Wall Street Journal.
John Wong, manager of Wang Investment Associates located above the former UBS PaineWebber’s office, said the office closed only a few weeks ago.
Marrone said the branch closed May 30.
Wong said he is experiencing a slowdown in the economy but he found it hard to understand why it forced out a major firm.
“I’m experiencing slowdown but it’s not that much of a slowdown,” Wong said yesterday.
The allegations against the brokers are part of a pattern of affinity fraud, a growing trend that affects immigrant groups. It involves unscrupulous brokers who prey on investors who share the same ethnic background or other connections, according to the Securities and Exchange Commission.
The complaint filed in April by Manhattan attorney Christine Bae on behalf of eight Korean-Americans, alleged the Flushing brokers Joon Ho Chun, James Kwak, Sam Jin and the branch manager Michael Liming Yung, conducted unauthorized trades that racked up high fees. The brokers could not be reached yesterday for comment.
The complaint asks for more than $2 million in losses.
