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Elaine Wah

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In this blog by IEX's Elaine Wah, the newest public exchange looks to refute public claims that the metrics it uses are designed to inflate its own volume numbers and mislead people.

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February 1, 2002

Starting All Over: Keefe, Bruyette & Woods, recovering from tragedy, is back trading after Septembe

By Sanford Wexler and Gregory Bresiger

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  • Starting All Over: Keefe, Bruyette & Woods, recovering from tragedy, is back trading after Septembe

Keefe, Bruyette & Woods (KBW), an important listed and Nasdaq player before the World Trade Center tragedy, is at the beginning of the long road back. Over the past few months it has faced huge professional and personal problems.

Many friends and key personnel were lost. The survivors of this employee-owned, private firm, as well as their families, were plunged into grief. It had to search for new offices. Earnings have been depressed.

"Our earnings are down, there's no doubt about that, but we do remain profitable," said an official of the firm, who declined to give specific numbers. However, he conceded that there have been "several days and weeks when we have lost money, but over the total period I believe we are profitable."

The attacks on the World Trade Center virtually crippled KBW's Nasdaq trading activities. Although it had been a large market maker in many Nasdaq financial stocks, KBW's Nasdaq trading desk was decimated. The firm was forced to suspend its trading in Nasdaq stocks and has only recently resumed this key operation.

On Sept. 11, the firm's offices and desk in the 88th and 89th floors in the South Tower at the World Trade Center were staffed with about 40 professionals: 21 traders, five market makers and 16 sales traders. All of the market makers lost their lives, as did 14 sales traders.

Today that number of professionals is about 25 and fate played a part in that number. Two traders had survived because one had called in sick and the other had overslept. KBW ordinarily makes a market in over 270 Nasdaq financial services stocks and is one of the top three market makers in over 45 of them. And the firm was something of a Nasdaq trading power, but nevertheless KBW officials say most institutional customers are coming back.

"We thank our institutional clients for their patience," said Thomas B. Michaud, chief operating officer and vice-chairman of KBW. "Before Sept. 11, we would trade over one million shares in the over-the counter market and now we're starting to operate at around that level again." He added that the firm's listed business is about four and a half million shares daily.

In his 15 years with the firm, Michaud said that this has been the most difficult period. That's because no part of the firm was left untouched by the tragedy.

Joseph J. Berry, the firm's co-chief executive, was killed. And so was assistant trader Christopher Duffy, the 23-year-old son of John Duffy, 52, who is now Bruyette's lone chief executive. Berry is survived by his son, Joseph Berry, Jr., a KBW investment banker.