Leahy and Vale selected Spear, Leeds & Kellogg to be Keane’s specialist, based on the company’s technology experience, affiliation with Goldman Sachs, and efficient trading. “They have all the power of Goldman’s research and tools,” says Leahy, “and they convinced us that they could match the more-intimate client relationship that a small firm offers.” But “what really sealed the deal for us was the specialist himself,” says Leahy, who liked the fact that specialist John Alatzas had climbed up the ladder of the trading-floor hierarchy, spending “half his life” working at the Exchange. And since adding Keane will bring Alatzas’s total book of business to just five stocks, Leahy hopes to receive a lot of his attention.
One potential drawback was that Spear, Leeds & Kellogg was among the five specialist firms under investigation for illegal trading. But in the countdown to the listing, Leahy says he couldn’t focus on that issue, since there was so little information available about the alleged wrongdoing at the time, and since the Exchange had cited nearly all of the specialist firms. “We did not make our choice based on an interpretation of who was more in the wrong or more in the right,” he says. “There are more important organizations [than Keane] that are going to be governing these guys and mandating changes in their approach. There’s no doubt changes will come, and those changes will affect all the specialists.” Although no charges have been filed, the NYSE continues to investigate the trading firms, and the SEC has conducted its own review, sharing the results with the Exchange in a critical report.
No Turning Back
Despite the scandals at the Exchange, the listing was still a momentous event for the Keane staff. The night before the listing, Leahy, CEO Brian Keane, and eight employee representatives met at a restaurant in lower Manhattan to mark the milestone. Having each of the firm’s divisions send a representative—a long-term, high-performing employee—to stand on the bell platform as the CEO opened the market, says Leahy, added an appropriate touch. It helps “show [our employees] the way we think of ourselves and how we operate,” he says.
At the dinner, Brian Keane toasted the assembled employees. “Tomorrow we are graduating to the big time,” he said. And at 9:30 the next morning, the employee representatives crowded the bell platform overlooking the trading floor as the CEO rang the bell and “KEA” crossed the electronic ticker. The stock opened at $13.25, and has held its value, ending an early-December trading session at $14.41.
In the face of the ongoing controversy at the Exchange, Leahy remains confident that Keane made the right move—to bolster the liquidity of its stock, gain visibility with investors, and create a “psychological data point” for its employees, showing them that the company has truly transformed itself into a global business. Now, along with 2,800 other listed companies, Keane is waiting to find out what will happen next in New York. “What’s the next shoe to drop? Who knows?” says Leahy.