Starting Over

When the planes slammed into the World Trade Center on Sept. 11, few companies were as hard-hit as a small, close-knit firm called Sandler O'Neill. Of the 83 people in the office that morning, only 17 got out alive. Employees lost mentors, assistants lost bosses, friends lost friends. This is the story of what happened next.

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Living With the Dead
Early in the morning of Sept. 17--the Monday the stock market reopened--CNBC reported that Sandler O'Neill was going out of business. A furious Jimmy Dunne demanded a chance to rebut the story on the air. In an emotionally charged interview two days later, Dunne insisted that the firm would rebuild. And then he took a page from the Herman Sandler handbook: He thanked his competitors.

For all of Dunne's on-air bravado, the situation at Sandler O'Neill was dire, and its survival far from a sure thing. Think about it: The company had just lost 40% of its employees--including a third of its partners, all its bond traders, its entire syndicate desk, and almost all its equity desk. Lost along with the people was all their knowledge--their contacts, their ways of doing business, their institutional memory. The intricate communications network that connected the firm to the rest of Wall Street and fundamentally made it possible to do business--that was gone too.

In the chaos of the first few weeks, Sandler O'Neill simply would not have made it without the help of its competitors. Firms that used to compete with Sandler for deals now put the crippled firm in their deals to get it some money. Just as important, they gave it information--"market color," as traders like to call it. What was the spread on the A-rated trust preferred bonds? What was the last bid? How big were the blocks? That kind of crucial information is what Sandler's traders used to see on their computer screens; now, with the traders dead and the computers destroyed, the firm needed its rivals to convey the market color over the phone. Its competitors went one step further. "They made sure we weren't being taken advantage of," says Joel Comer, the bond salesman turned trader.

With the syndicate team dead, no one at Sandler knew how to put together the many pieces of a deal. Again, competitors rushed to help. "The other syndicate desks had to tell us what to do," says Mark Fitzgibbon, the co-head of research who was suddenly running the syndicate desk. "They taught us how to syndicate. They'd say, 'Did you send the regM?'--a standard document. And we'd say, 'What's that?' "

Of course, the firm's resuscitation depended, ultimately, on the will of its surviving employees. People up and down the ranks of the firm willingly performed--there's no other phrase to describe it--daily heroics. James Colbert's boss had created a proprietary financial model to analyze bank credits, and now he was dead. But his model was critical for the $700 million deal the firm still hoped to pull off. Colbert--a low-paid 23-year-old assistant with less than a year at the firm--suddenly had to take over his boss' job. He was the only person left at Sandler who understood the model.

"You know that sign they have posted over the trading desk, 'Our Little Big Firm'?" Colbert says. "It was never like that before, at least not for me. It was like that for Jimmy and Herman and those guys. Now I know what that sign really means."

Every phone number of every person Sandler's traders had done business with over the years was vaporized in the Sept. 11 attack. In the aftermath, the firm desperately needed to find these people and reconnect with them. Again help came from an unlikely source: a back-office assistant who, after years of answering the trading floor phones, could recall the names and numbers by heart.

Sandler's investment bankers were determined not to abandon a single deal--both as a matter of pride and to send a signal to the Street that the firm was open for business. So it was that on Sept. 12--yes, Sept. 12--they filed to underwrite a long-planned secondary offering.

Sandler employees did all this while coping with grief the likes of which most of us will never know. Many of those who got out of the World Trade Center remained haunted, wondering who else they could have saved. "I feel guilty because I left. If I knew it was dangerous, why didn't I tell everyone else to get out?" says one survivor. "That's hard to accept. I should have told them to leave."

Others found themselves having trouble functioning at work. Sometimes, says one salesman, he just sits at his desk staring into space. "Fifteen minutes can go by and I have no idea where the time has gone." Another says he's having trouble calling new customers; he doesn't want to talk to people he doesn't already know.

Every day, the living had to go to work with the ghosts of Sandler O'Neill. The hovering presence of the dead could be felt in business meetings, on the trading floor--everywhere. The walls of Sandler's offices were covered with their names. They would appear whenever someone phoned and asked for Bruce Simmons or Mark Rosen or Michael Edwards, and someone at Sandler had to reply, "He's dead." When Sandler's salespeople sold stocks and bonds, they were selling not just for themselves but for their dead colleagues. (Early on Dunne decided that for the rest of the year, any commissions generated by a client of a deceased Sandler employee would go to that employee's estate.) And the living constantly asked themselves what the dead would have done in this or that situation. "Every morning I used to go into Herman's office to talk about problems I was trying to sort out," says Jon Doyle. "Now every day I still have those conversations--in my head."

As it rebuilt the business, Sandler had one other burden: how best to take care of the families of the deceased. From the very start, Dunne knew he wanted the firm to be generous; after all, family takes care of family, and that's how Sandler always thought of itself. Like the other hard-hit firms, it created a charity fund, hired grief counselors for the families, and set up a family center to help with the grim logistics of recovering, burying, and mourning the dead. But Dunne wanted to do more. So unlike Cantor Fitzgerald--which famously cut the deceased off the payroll four days after the attack--Sandler quickly sent every family a check covering the salary of the deceased employee through the end of the year. Within two weeks the firm decided to extend health-care benefits for five years. And it guaranteed the families that it would pay year-end bonuses--though Dunne, Doyle, and Price had not yet figured out how much.

Though Price was the firm's point man for family issues, everyone at Sandler O'Neill had long, difficult discussions with the relatives of their deceased friends. Many wives wanted to hear stories about their husbands at work. Others urged Sandler to continue rebuilding. But there was anger too. How could there not be? One woman told Price she hated everyone who still had a husband. In the middle of a workday, Joel Comer got a call from one of his partners telling him that a Sandler widow was furious with him. She was saying terrible things: how he didn't care about her husband, how he didn't care about her, and how it was unfair that he was alive and her husband wasn't. Comer listened and tried to stay calm. But when the call ended, he looked desperately sad. "Can't she understand that I'm in pain too?" he asked.

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