KBW Chairman and CEO John Duffy, 62, stepped down on Thursday for health reasons, concurrent with the investment bank's Q3 earnings announcement - they lost $15 million.  KBW, which focuses mostly on advising financial institutions, also said it planned to lay off 80 full-time employees, or >13% of its work force. Mr. Duffy recently was diagnosed with prostate cancer and, while he feels the prospects of successful treatment are good, the firm reiterated that health concerns forced him to retire one year earlier than planned.  Thomas Michaud will succeed Duffy as CEO, while Andrew Senchak is the new chairman. Like other financial institutions, KBW has been struggling of late in the wake of the sovereign debt crisis in Europe and fresh concerns at home about an economic slowdown.  Its quarterly loss was due, in part, to weak performance in its principal trading unit.  That unit recorded negative revenue of $20mn for the quarter, compared to nearly $17mn in revenue the year earlier.   Revenue from investment banking also fell 16%. The Moses of KBW. John Duffy oversaw the firm through its darkest moments - the aftermath of the 9/11/2001 terrorist attacks - and brought the firm to its current uptown-New York location.  KBW's offices had been located on the 88th and 89th floor of the World Trade Center’s south tower, and the firm lost 67 employees that day, including its co-CEO Joseph Berry, and Mr. Duffy’s son Christopher.  “The grief I felt is just impossible to put in words,” Mr. Duffy wrote in “Triumph Over Tragedy: September 11 and the Rebirth of a Business,” his 2002 book on the attacks. Thereafter, KBW hired new staffers, moved its offices uptown, rebuilt its Wall Street business and connections and, by 2006, went public.   The firm lost $30mn in 2008 related to a pool of structured debt products known as PreTSLs, and while the principal trading unit bounced back, it now finds its earnings power under water. In recent months, the firm also has had to deal with Mr. Duffy’s private life - he's embroiled in bitter divorce negotiations.  The the publicity from the divorce (including cover in Page Six of the NYPost) didn't sit well with board members, a firm spokesperson said it had not bearing on his departure. Why the Layoffs? Why not? As with everyone else, depressed trading and a slow investment banking environment has taken its toll and is the impetus for the layoffs.   [Dealbook, 10/27/11]