Inside Ex–Lehman Boss Dick Fuld’s New Firm, Matrix Advisors

Now an adviser to smaller businesses, the former chief executive of Lehman Brothers plans to reopen the National Stock Exchange.


After Lehman Brothers Holdings collapsed in September 2008, chief executive Richard Fuld, Jr. — blamed by many for the downfall of the 158-year-old investment bank — vanished from public view. He also decided to get back to basics.In 2009, Fuld launched Matrix Advisors, which helps small companies overlooked by large investment banks with business development and access to capital markets. The firm is built on the classic merchant banking model reminiscent of Lehman’s roots in the late 1800s, says David Karlin, now managing director at Matrix, who joined the firm from New York–based Legend Securities in 2011. “If you’ve got a company that’s gone through A to G,” Karlin tells Institutional Investor, “we try to get them through the rest of the alphabet as quickly as possible.”

At its midtown Manhattan office on Park Avenue, Matrix has doubled its team to 12 employees over the past two years to keep up with growing deal flow and ensure that it has enough staff to continue monitoring and working with each of its portfolio companies.

The firm advises clients on a range of matters, from opening product distribution channels to completing mergers and acquisitions and sourcing private equity and venture capital funding. “What I like about Matrix is it’s not about a transaction,” Karlin says. “It’s about building businesses and creating jobs.” Clients come from a range of sectors, including construction, mining, software, alternative energy and financial services.

Fuld, 69, once nicknamed the Gorilla of Wall Street, made headlines in May after delivering the keynote speech at the Marcum MicroCap Conference in New York, which marked his first public appearance since the global financial meltdown. “I don’t include my wonderful time with Congress as a public event,” he joked about his 2008 testimony, which saw Republican Representative John Mica famously portray him as the “villain” of the crisis.

The conference, which aims to bring investors together with companies that have market capitalizations under $500 million, aligns with Matrix’s focus on the small and medium-size enterprise market. One audience member asked the question on the minds of much of Wall Street upon hearing of Fuld’s return: Why didn’t he “ride into the sunset?” Fuld replied somewhat cryptically, “I didn’t think I had a choice.”

What is clear is that Fuld’s dip back into the limelight comes as Matrix prepares to make a couple of big announcements later this year. Most prominent, Fuld is part owner of the Jersey City, New Jersey–based National Stock Exchange, which plans to reopen this fall. Matrix advised on the sale of the exchange, and some of the firm’s principals are also shareholders. NSX, which accounted for 0.2 percent of U.S. trading volume, shuttered last year after its parent, the Chicago Board Options Exchange, chose to exit the stock business.

Formerly known as the Cincinnati Stock Exchange, the 130-year-old NSX was the first all-electronic exchange. It will allow investors to trade shares of small and midsize companies, which Fuld and Karlin see as being underserved by the current financial system after years of consolidation of secondary exchanges. “You’ve got NYSE and Nasdaq, pink sheets and the bulletin board,” Karlin says, illustrating the gap between major exchanges with stringent listing requirements and the over-the-counter markets plagued by a lack of transparency.

Fuld’s tarnished image hasn’t hurt Matrix’s ability to do business, according to Karlin. In fact, clients and the third-party investors, mostly family offices, that the firm matches them with often come from the Rolodex that Fuld built over his 42-year career at Lehman.

Although Karlin draws a comparison between Matrix now and Lehman’s early days, he insists that it intends to stay small. Management prefers to promote from within, and most hiring is at the analyst and associate levels, with new recruits sourced from university partnerships. “We believe strongly in having a tight core team,” Karlin says. “My door’s open all the time, and Dick’s door’s open all the time.”