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Recovery Plans Swing Into Action


For at least two mutual fund companies, disaster recovery plans saved the day when the two World Trade Center towers were destroyed two weeks ago. Both Fred Alger Management and OppenheimerFunds were up and running within hours after their investment offices were obliterated Sept. 11.

Foresight paid off for Fred Alger Management which occupied offices on the 93 floor of One World Trade Center. Despite the tragic death of the firm's president, David Alger, and 38 other members of the firm's investment staff, the company's full back office operations were switched over to the firm's Morristown, N.J., satellite office by the end of that day.

David had taken over the reins of the firm from his older brother and founder of the firm, Fred, in 1995, said Jim Connelly, executive VP of Alger. As the firm grew and assets flowed in, the younger brother determined that the firm needed more room and a more prestigious locale--one that carried more panache to showcase to Alger's international clients.

The firm had previously been headquartered at 75 Maiden Lane, just above a nail salon, quipped Connelly. The firm also maintained an operations center which is based in Jersey City, N.J., just across the river from the firm's former headquarters.

Planning for the Unthinkable

When David showed the intended new World Trade Center offices to his brother Fred, the elder Alger who still served as chairman of the board, was supportive of the office's move, but fearful that a bad storm or some type of terrorist attack could potentially impact both the downtown Manhattan and Jersey City locations. "If something happens at one site, it could affect the other site," Connelly recalls Fred Alger saying. He insisted that a third office be established at a more remote location, Connelly said.

As the firm prepared to move to its new World Trade Center headquarters in December of 1998, Alger was simultaneously readying its fourth floor office at the Morristown site which would support the firm's identical systems, said Connelly. "Every single system that ran from both firm locations is replicated here and were backed up every night," Connelly said. Those systems include the investment management and marketing functions of the firm. "We have a complete replica of our (Manhattan) trading floor," he said.

In addition, because Alger serves as its own transfer agent for all of its shareholders, the firm also has its own proprietary transfer agency system fully operational from the Morristown office, Connelly said.

Furthermore, unlike other mutual fund firms that look to outside companies to price their portfolio securities, Alger handles all of its own daily pricing; a complex system that had also been duplicated in Morristown, he added.

Ready and Waiting

The Morristown office is located about 35 miles west of the firm's former Manhattan headquarters, and was home to only a handful of marketing employees who had moved into the office last year. Besides housing those employees, the Morristown office consisted of empty but carefully assigned cubicles that were fully stocked, ready and waiting for employees to move in in the event of an emergency or crisis, Connelly said.

But Alger hadn't just set up a parallel operating location. "We did drills, department by department," Connelly said. Each employee in Manhattan and Jersey City was fully equipped with a package of information containing exact directions on how to get to the Morristown site by several different means of transportation, Connelly said.

That proved vital as many of the firm's New York employees had problems accessing their cars in the midst of the disaster aftermath. "When people got out here, everyone knew exactly what to do, sat down, logged in and started working," Connelly added.

History Teaches OppenheimerFunds

In 1993, after the first bombing attack at The World Trade Center, top executives at OppenheimerFunds realized that it was imperative to have emergency contingency plans in place, said Gregg Stitt, OppenheimerFunds' spokesman. OppenheimerFunds is a subsidiary of MassMutual Financial Group of Springfield, Mass.

While the fund firm's five million shareholder account records and shareholder servicing division had long been housed in OppenheimerFunds' Denver facility, the investment management and trading functions were handled from its offices on the 31st to 34th floors of Two World Trade Center.

The firm's business recovery plan went into high gear after all 598 employees had been evacuated from the building and the firm realized that the World Trade Center was forever gone, Stitt said. Anticipating that the stock market might reopen the following day, OppenheimerFunds relocated its downtown employees to a "suburban New Jersey" operating center, said Stitt, who declined to disclose exactly where the office was located.