Locked Down: Boston Mutual Fund Industry Works from Home

This was the scene on Federal Street in the Financial District.
Jim Davis | The Boston Globe | Getty Images
This was the scene on Federal Street in the Financial District.

Larry Peruzzi, who runs a trading desk at a small institutional broker in Boston, came into his office at 7:45 a.m. on Friday and told his two-person early morning crew to immediately leave and prepare to work from home.

The city was not yet under virtual lockdown, but police had shot a suspect in the Boston Marathon bombing overnight, and a manhunt for the second suspect was under way. On Peruzzi's drive in, "The highway was just packed, and crawling," he said in a phone interview.

"It was just eerie. There is low cloud cover so you can't see the tops of the building and electronic message boards are flashing directions and amber alerts. I'm looking out the window and a military helicopter is flying by."

Some of the largest U.S. financial companies asked employees in Boston to work from home on Friday, disrupting the biggest center for U.S. mutual fund management and depressing trading activity in some markets.

Fidelity Investments, which manages $1.7 trillion of U.S. investment assets and is the second biggest mutual fund company, told employees to work from home. Other large financial firms, including Bank of America, Citigroup, JPMorgan Chase and Manulife Financial's John Hancock unit, also asked Boston employees to work remotely.

Loomis Sayles, which manages $191 billion, had about 50 percent of its staff in the office. Many of the firm's traders and portfolio managers had showed up early before authorities had widened their travel restrictions, said Dan Fuss, vice chairman and senior portfolio manager.

"All the traders and portfolio managers that need to be here are here, so we did not have to activate our remote site," Fuss said. "We've got every single desk manned, so we are fine."

The impact on markets was not outsized, strategists and analysts said. In the stock market, volume was slightly above average, helped by the fact that options were expiring.

Still, the change in routine weighed on trading volumes in many markets, which were already relatively slow because of the lack of economic data. About 20 percent of the nearly $15 trillion of U.S. mutual funds and exchange-traded funds are managed out of Boston, according to Lipper.

"A lot of folks in Boston are out of the market, and anyone not in Boston is stuck watching the TV trying to find out what's going on there," said Brad Bechtel, managing director at Faros Trading, a foreign exchange brokerage based in Stamford, Connecticut.

A Well-Timed Test

Friday was a test of the emergency plans that many firms put into place after the September 11, 2001 attacks.

Asset manager MFS Investment Management, whose Boston headquarters on Huntington Avenue near the Prudential Center houses more than 1,000 employees, had performed its semiannual test of its work-from-home plan on Monday, the day of the blast.

"It worked fine," said company spokesman John Reilly.

Traders were encouraged to work at MFS's business recovery facility in a suburb about 25 miles outside of the city because it is harder for many of them to do their jobs from home, Reilly said. The company manages about $348 billion.

At many firms, however, several people had made it to work earlier in the morning.

A Financial Industry Regulatory Authority spokeswoman said only a very small number of Boston employees were onsite Friday morning, and its building closed at noon.

But the industry-funded regulator has contacted all securities firms in the area and will work with them to ensure continuity of their business operations, she added.

Financial firms in Boston were not the only ones asking employees to stay at home. Lawyers who work in the Boston offices of firms including Dechert LLP, McDermott Will & Emery and Goodwin Procter LLP were working remotely.

Electronic medical record provider Athenahealth Inc , whose Watertown office is located on the same street where police are camped out, instructed its 1,000 employees to work from home, said spokeswoman Holly Spring. The company is conducting all of its business through its Belfast, Maine, Birmingham and Chennai offices.

The Cambridge office of EMC Corp, a global technology company, was closed Friday, a local employee said. Employees in the areas locked down by the Boston police were given the option of working from home.

Travel from Boston was tricky.

Robert Lutts, chief investment officer at Cabot Money Management in Salem, Massachusetts, had planned to take a train to New York, but service on Amtrak's Acela train out of Boston was suspended. He decided to take a flight from Logan airport outside of Boston.

"On the main approach to Logan, every taxi was being searched completely. There were about 20 taxis lined up with passengers told to get out while the state police went through every trunk, searched every piece of luggage."