Cantor Fitzgerald rises from the ashes
Three weeks after the Sept. 11, 2001, terrorist attacks, workers in the Los Angeles office of Cantor Fitzgerald flew to New York to attend the memorial for Cantor employees who had died in the firm’s offices near the top of One World Trade Center.
Chairman and Chief Executive Howard Lutnick, whose own brother and best friends were among 658 Cantor employees killed, girded himself for another loss. He was convinced that the L.A. employees had come to tell him they were leaving for a less broken firm.
His heart pounded as they walked into his Manhattan apartment to deliver the news. “We’re never leaving.”
“See, it’s unbelievable — I get emotional every time. Unbelievable,” Lutnick said after choking up while recounting the story recently.
As it turns out, those employees didn’t need to worry about Cantor’s future. At the same time that Lutnick was shuttling between funerals, he was also bringing on new employees to begin rebuilding Cantor. On the weekend before the memorial, Lutnick had interviewed and hired 35 people from temporary office space in midtown Manhattan.
The expansion has rarely stopped since then. Lutnick, who oversaw 2,100 employees before Sept. 11, when Cantor was known primarily for trading bonds, now oversees 4,500 employees and has grown his company into a full-service investment bank.
The Sept. 11 attacks devastated Wall Street firms that had their offices in the twin towers. But among the many improbable things to come out of that day is the phoenix-like rebirth of these companies.
Investment bank Keefe, Bruyette & Woods has nearly tripled in size from its pre-Sept. 11 size, after losing 67 of its 224 employees. Sandler O’Neill, a boutique bank that lost 66 of 171 employees, is now nearly twice as large as it was before the attacks.
No company, though, lost as many employees as Cantor. And none has risen to be quite so powerful a decade later.
As the 10th anniversary of the attacks approaches, the company is planning for its annual memorial in Central Park and putting out press releases about its Monday charity day. But Lutnick is also making plans to expand into hedge funds and real estate brokering.
“I couldn’t imagine he’d build it back as strongly as he has,” said Richard Repetto, an industry analyst who works for Sandler O’Neill and has followed Cantor’s growth since the attacks.
“Those firms — it was devastation. Just to see any of them survive says a lot,” Repetto said.
Cantor’s new offices in midtown Manhattan reflect the balance between the past and the future. The executive suites are modestly positioned on the second floor — 100-some floors lower than they were in the twin towers — but they overlook Park Avenue and have all the glass and lacquered wood you would expect from a successful investment bank.
On Lutnick’s desk are statuettes commemorating some deals involving Cantor. He also has a bronze hand, done by Auguste Rodin, that was on his desk in the World Trade Center. It was found in the rubble.
“It’s just got a couple little scratches and dents on it,” Lutnick said, examining it again. “It came from, you know, 1,500 feet up.”
Lutnick survived that morning because he was taking his son to his first day of kindergarten. That evening the other survivors convened on a call in which they decided together to keep going. During the days that followed, though, it was not clear that would be possible.
In addition to the employees that were gone, Cantor had lost most of the files, hard drives and technological capability that make a brokerage firm tick.
Its early survival is due in no small part to the kindness of strangers. Technology firm Cisco Systems Inc. sent a dozen 18-wheelers full of routers, cables and other hardware to Cantor’s office in New Jersey.
Microsoft Corp. flew out some 50 employees to help Cantor break into the password-protected computer accounts of all the workers who were gone.
“We are stuck together with string and bubble gum,” Lutnick said about the aftermath of Sept. 11.
He and the other surviving executives had to make hard decisions quickly. The corporate bond desk lost 82 of its 86 employees, so it was shut down. The boss of the U.S. stock trading team happened to be out of the office that day, so he was given the power to rebuild his division.
Lutnick’s most controversial move was to cut off the paychecks to employees who had died. At almost the same time, though, he committed to giving the victims’ families 25% of Cantor’s profits for five years, and 10 years of healthcare.
That motivated much of the company’s early growth strategy.
“We built our current business line and when we found the right boss to add the next business line we added that, but always with an eye toward short-term profitability, because we had to help our friends’ families,” Lutnick said. “That was the key driver for us.”
In the ensuing years Cantor, still working out of temporary offices, bought other brokers, but also went in unexpected new directions like gambling. Cantor Gaming created mobile devices that are used in the sports betting parlors of Las Vegas casinos (in a similar vein, last year Cantor tried to create a forum for betting on movie box-office results, but it was ultimately banned by lawmakers).
The breakthrough year was 2004, when Cantor’s board decided to break off the division that executes trades on behalf of banks and institutional clients — the business that was the hardest hit on Sept. 11. BGC Partners, where Lutnick is also the CEO and chairman, went public in 2008 and now has 3,000 employees.
By 2006, Cantor’s growth had delivered $180 million to the Sept. 11 victims’ families, and these families have tended to speak in glowing terms about Lutnick and Cantor.
“I’m glad to see that they are strong and thriving,” said Bonnie McEneaney, whose husband, Eamon, was a senior vice president at Cantor. “That’s an important end product of their focus on the future after such a horrific event.”
The 2008 financial crisis hit Cantor and BGC, but they weathered the downturn better than many financial firms and used the opportunity to snap up employees other companies were letting go.
After what they’d been through, the situation seemed much less dire than it did for other banks, Lutnick said.
“We know that we can build through anything,” he said. “We have dealt with much more difficult circumstances than these.”
BGC’s revenue reached all-time highs last year, and in the latest quarter profit was up 34% from a year earlier. Cantor is not a publicly traded company and does not release its results.
To mark the 10th anniversary, Cantor will hold its annual charity day, when celebrities take to the trading floor and every dollar of revenue is given away, on Monday.
One of the charities is the Cantor Fitzgerald Relief Fund, which was founded to help the company’s families. It too has grown, expanding beyond that original mission to make regular donations after natural disasters and terrorist attacks.
As for Lutnick, he will spend the morning putting his kids on the bus to school, as he does every day in a small personal rite that reminds him of his own luck in surviving.
After that, he will go to work.
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