Tuesday, July 6, 2010

WSJ 'Bond Broker Cantor Fitzgerald Took Pride in Its Perch at the Trade Center,'

September 16, 2001


by Gregory Zuckerman, Steve Leisman and Ann Davis, Staff Reporters

Moments after the first terrorist-hijacked plane slammed into the World Trade Center, a Wall Street trader sent an instant e-mail message to Marissa Dinardo, a broker at Cantor Fitzgerald Partners with offices on the101st, 103rd, 104th and 105th floors. Was she OK?

See full coverage of the attack.

"I am here. It's getting smoky. I am having trouble breathing." Ms.Dinardo instant-messaged back. She wasn't heard from again.

The spectacular views Cantor Fitzgerald had from its offices atop the World Trade Center was a point of pride. On Tuesday morning, the brokerage firm's offices became the source of tragedy.

There may be no firm as devastated by the terrorist attack as Cantor Fitzgerald. About 800 of Cantor's 1,500 world-wide employees worked out of the top of the trade center's North Tower. As of late yesterday, about 600 were unaccounted for. Three were located in area hospitals and almost 200 were out of the office at the time of the attacks.

Beyond the terrible loss of life, disruptions to the firm could handicap the trading of bonds nationwide, at least in the short term, because of the major role that Cantor Fitzgerald plays in the bond market. The firm is the dominant bond broker, controlling as much as 75% of all trading in long-term Treasurys, such as the benchmark 10-year Treasury note.

While the attack was particularly tough for Cantor because it had its headquarters there, others were also devastated. The U.S. unit of Fuji Bank Ltd., which was on floors 79 through 82 of the South Tower, can't account for 680 employees. Marsh & McLennan Cos. Inc., a financial-services firm, which had offices on floors 93 through 100 of the North Tower just below Cantor, said it had accounted for more than 1,000 of its 1,700 employees but gave no details on the others. The Port Authority of New York and New Jersey said about 150 of its 3,000 employees in the World Trade Center were unaccounted for, but sources close to New York Gov. George Pataki confirm that Neil D. Levin,the newly designated executive director of the Port Authority, is among the missing.

The first of the two planes struck the North Tower about 20 flights below Cantor's offices, trapping many people on the higher floors. Soon smoke and flames reached the offices. When she first smelled smoke, a secretary at Cantor told a friend on the phone: "I'm out of here, I'm not waiting around." As of late yesterday, she was not accounted for.

In the middle of a conference call with the West Coast, a Cantor trader yelled, "I think a plane just hit us." For more than five minutes screaming was heard, before the connection was cut off.

In anxious phone calls to family members, some Cantor workers trapped high in the tower said they had been told to try going to the roof and were trying to make their way there. With thick black smoke obscuring their vision, it isn't known whether anybody made it there. Others headed down the stairwell, with at least one person maintaining cellphone connection with a family member for a while before it broke off.

"From the best of my knowledge, the people couldn't see their hands in front of their faces. They wouldn't know whether to go up, down, sideways or left or right. I don't think they had a shot, and I think they knew that," says a person knowledgeable about the frantic efforts to escape."They were incredibly pessimistic." The victims cried out at various points, with audible comments like, "We can't get out. … There's smoke everywhere."

Numbed by the disaster, hundreds of dazed and teary-eyed relatives of missing employees from Cantor Fitzgerald have been gathering at the Pierre Hotel in New York, where the company set up a crisis center. Wearing tags with the names of their missing loved ones written on them, they have been dialing their cellphones constantly searching for any information they could find. Some have sat alone in silence, while others gathered into crowds to discuss the latest rumors.

Many family members and friends have been walking the streets or riding ferries and trains all day seeking information from hospitals. Sam La Forte was searching for his brother, 39-year-old Mike La Forte. A broker at Cantor for 10 years, Mike had called his wife from his 105th floor office when the plane hit the building Monday. "I can't believe a plane just hit the building," he told his wife, according to Sam La Forte. "Tell the kids I love them and I'll talk to you soon," was the last thing he told her. Sam La Forte, working across the Hudson River in New Jersey when the plane hit,watched in disbelief as the building where his brother worked collapsed. He and his wife called hospitals and hotline numbers all night without sleeping.

Cantor is different from many of the bigger Wall Street firms. A private partnership, the Cantor firm often finds new hires from friends and family,creating a close-knit firm where employees often went to the weddings and Bar Mitzvahs of each other's children. "We'd talk all day over the [phone] system from our offices, I can hear in their voice when they have a cold,"explains Peter DaPuzzo, co-president of institutional equities, who is based in the firm's Darien, Conn., office. "I'm suffering, I feel like my heart's been ripped out."

Some of the firm's senior executives survived, thanks to good fortune.Chairman and Chief Executive Officer Howard Lutnick wasn't yet in the office because he was dropping his son off at school, according Mr. DaPuzzo. Mr. Lutnick could not be reached yesterday. The firm's other equity co-president, Philip Marber, was traveling in Ohio. Stephen Merkel, executive managing director, was on the 78th floor of the North Tower and turned around and came down safely, says Mr. DaPuzzo.

Three employees who were working on the 101st and the 103rd floor when the crash occurred have been located at New York City hospitals, he adds,and Cantor is hoping other survivors will turn up as rescuers search through the wreckage.

But many others may not have been so fortunate. Mr. Lutnick's brother Gary, who worked in the bond division, was among those who hadn't been accounted for as of yesterday afternoon, according to Mr. DaPuzzo. Others still missing, according to Mr. DaPuzzo: Fred Varacchi, president of eSpeed Inc., a Cantor Fitzgerald publicly traded unit; Doug Gardner, chief financial officer of both companies; Pat Dwyer, head of equity sales in New York for Cantor; and Michael Rothberg, head of program trading; and Tim Grazioso, chief operating officer.

As of midday yesterday, families of Cantor Fitzgerald employees were waiting by the phone for news, praying for a miracle. Bill Meehan, the firm's chief market analyst, was working on the 104th floor of the World Trade Center when the plane hit the tower. Yesterday, a woman at Mr.Meehan's Connecticut home who identified herself as Mr. Meehan's sister-in-law said the firm had told the family that it hadn't heard from anyone from the floor, and that they should "prepare for the worst."

In the past year, the firm has shifted many of its employees to eSpeed,an electronic bond-trading system. Because the company's computers and databases were backed up elsewhere, executives are hopeful eSpeed can begin trading in the next week or so, which may aid in getting bond trading back to normal. But for now, the loss of Cantor Fitzgerald and eSpeed could hurt the flow of bond trading, traders said.

Executives of the firm say they're intent on reopening both the bond and equity trading divisions by next week. The company is talking to banks and the Federal Reserve about setting up a $1 billion line of credit so that its bond division and eSpeed can reopen.

-- Anita Raghavan in London and Lynn Cowan in Washington contributed to this article.

Write to Gregory Zuckerman atgregory.zuckerman@wsj.com, Steve Liesman atsteve.liesman@wsj.com and Ann Davis andann.davis@wsj.com

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