Cantor Fitzgerald Knocks 9/11 Fund

(CBS)  Cantor Fitzgerald, the firm that lost two-thirds of its employees in the World Trade Center attack, has concluded that the federal compensation fund for the terror victims is unfair and violates several laws, according to a published report.

The bond broker, which lost 658 of the 1,050 people employed at its headquarters on Sept. 11, 2001, is expected to submit a report to the federal government this week, The New York Times reported Tuesday.

The report contains numerous objections to the way the payments are being calculated, and claims that the fund has placed an artificial cap on awards to highly paid employees like those at Cantor, the Times said.

It argues that capping payments violates the legislation that created the fund, which was part of the airline bailout bill passed by Congress after the terrorist attacks.

The report also argues that basing lost income on after-tax projections is illegal under New York State law, and that presumed payments of $250,000 for pain and suffering are "woefully inadequate," the Times said.

Pamela Falk, a City University of New York professor who has written extensively about the fund, agrees: New York State awards have been calculated on gross salaries.

"A bond trader, who makes $140,000, that would be his gross salary, his net salary would be $100,000 after taxes. The difference in the award could be the difference between approximately $3 million and somewhere around $5 million," she told CBS Radio News.

Falk calls this the most serious challenge to the fund, both on a legal basis and a policy basis.

"Right now, very few victims have applied to the fund, because it is, essentially, unfair," she said.

When reached by the Times, Kenneth Feinberg, the fund's administrator, said he had not seen the report and could not comment on it.

He promised to "review it with great care" but reiterated his previous statements that "there will be no change in the final rules and regulations."

The fund's awards are based on a formula that includes earning potential and a non-economic payout for pain and suffering of $250,000. Another $100,000 is added for a spouse or each dependent child, and life insurance and workers compensation payments are deducted.

Families who chose to participate in the fund must relinquish the right to sue the airlines and other entities.

Cantor Fitzgerald's formula for calculating awards for its relief fund uses gross income and higher estimates of future earnings than those used by the government, the Times said.