Remember, Rebuild
How a Wall Street firm that suffered epic losses vowed to take care of its own-and look to the future
Last month, John Duffy was busy putting the final touches on one of the biggest deals of his career. His firm, Keefe, Bruyette & Woods, was completing preparations for an initial public offering, one that could raise about $100 million for the Manhattan-based research and investment company.
But while Duffy, the firm's CEO, was pleased, he was also struggling. This week, he will lead the firm at a gathering in a quiet section of the Central Park Zoo to remember the 67 employees who died five years ago. Duffy will greet families, comfort widows, and linger on memories of his own 23-year-old son, Christopher, also killed in the terrorist attack that day. "I don't think that it gets any easier looking back," says Duffy, 57. "For most parents it is their worst fear-having to bury a child just seems terribly unfair."
Rebuilding the firm, known on Wall Street as KBW, wasn't anybody's first thought. But there were families and young children to care for. Duffy also worried that survivors would fall into a black hole of depression and guilt. So he got to work. "We thought that if we could rebuild it," he recalls, "that [KBW] could be a support mechanism-that it would make us feel good again."
It didn't happen overnight. Sympathetic competitors threw a few deals their way. But the handouts were just temporary. A new office, near Times Square, conferred a sense of stolidity. But nerves were still raw. "There was definitely survivor's guilt," says Cliff Gallant, a managing director. He fled after the first plane hit the north tower. "It's something I still think about. Could I have done something? Could we have saved more people?"
KBW's famously close-knit family had been fractured. New employees, Duffy said, "were walking on eggshells." Not all stayed, and what Gallant calls "a second round of instability" hit the firm. It took more than two years for a sense of normalcy to return. But 9/11 remains part of KBW's fabric. In the reception area, visitors pass a painting of an American flag inscribed with the names of the dead. A large sculpture of an American flag and a Christian cross, made from steel salvaged from the World Trade Center, rests in a sitting room. This week, a silver chalice, with the names of the deceased etched in its base, will be unveiled.
Duffy commissioned the work to mark the fifth anniversary of the attack. But in all other respects the firm will commemorate the day as it has before. Employees may take the day off if they wish. On the KBW trading floor, a moment of silence will be observed marking when the second plane hit. Then, at 6 p.m., everyone will gather at the firm's plaque in Central Park.
Restaurants and rock bands. The terrorist attacks, Duffy says, have taught him to stop waiting to make things happen. Before September 11t he says, he was reserved, deliberate, plodding. Now he's more decisive and willing to take risks. If someone says he wants to take a trip, he says, "I tell them to take it," noting that you never know if tomorrow will come. In that spirit, Duffy has personally bankrolled several businesses in areas that have little to do with banking, including funding a "fast casual" restaurant start-up in California and backing a rock group from Canada. The group, Random Robbery, has just cut a song about 9/11, one based on a book about KBW's experiences, which Duffy wrote. "I would have never done this record deal," he says, "five years ago."
His willingness to embrace new challenges and expand his horizons has benefited KBW, which today is one of the premier boutique investment and research firms in the nation, earning $17 million in profit on about $308 million in revenues last year-compared with more than $185 million in revenue generated in 2001.
With new offices in Atlanta and London, KBW tracks 489 financial service companies now, compared with about 270 before 9/11, and doubled the number of employees, to 430. Last year, its research coverage received high marks in Institutional Investor's "Best of the Boutiques" survey. This year, the Wall Street Journal named five of its analysts "Best on the Street." Increasingly, KBW is leading investment deals that many expected to go to far larger firms.
That's a long way from where the firm was five years ago. "We aren't taking victory laps," says Thomas Michaud, KBW's vice chairman and president. "But taking care of the families and rebuilding the firm were some of the most important things we could do. And we are satisfied with the way it turned out."
KBW worked aggressively for the families, developing a shepherd program in which employees became guides for them. During the first few months, these designated employees offered emotional support and provided help with funeral arrangements and other pressing needs. Later, they made sure families had the help they needed to file complicated 9/11 compensation and insurance claims and to manage their estates.
Duffy also established the KBW Family Fund. For a total of four days between 2001 and 2003, KBW donated the profit from every trade to the fund. Other firms stepped forward to run trades through KBW, helping it raise more than $16 million for families, money that is paying insurance premiums and sending children to colleges and private schools; about $12 million has been given to the families of KBW employees who died on 9/11. If the fund runs dry, Duffy says, the firm will replenish it with trading income. "And we would tug at the same heartstrings," he adds, saying he expects Wall Street would again come out and help run the numbers up.
Duffy's support hasn't gone unnoticed. Dolores LaVerde has never gone to any of the 9/11 anniversary memorials at KBW. Her loss is still too fresh. But she greatly appreciates the dedication the firm has shown in memory of her daughter, Jeannine, an administrator at KBW who perished that day. The firm quickly distributed funds to help support Jeannine's 10-year-old son, Christopher. A KBW employee sent him a gift that first Christmas. And LaVerde continues to be notified every time there's another gathering or memorial service. "They have been generous and they have been in communication," she says. "They have remembered, and they have honored their people who were killed that day." Nothing, of course, can make a loss such as hers any easier to bear. This sad fact binds Duffy, LaVerde, and thousands of others who lost loved ones on that terrible day five years ago. "It is still a knife in the heart," says LaVerde, of her daughter's death. "We remember her every day."
This story appears in the September 11, 2006 print edition of U.S. News & World Report.