Wall St’
In an effort to pressureUS companies into hiring more blacks, civil rights leader Jesse Jackson is opening up office on Wall Street, reports Mark Tran in New York
JESSE JACKSON, the civil rights leader, is taking on Wall Street and corporate United States after humbling oil group Texaco, which recently agreed to settle a racial discrimination suit out of court for a record $176-million.
Jackson is planning to open an office on Wall Street that would seek to pressure US companies into hiring and promoting more blacks and members of other ethnic minorities – to “open up the walls on Wall Street”, as Jackson said recently. Another maverick, property tycoon Donald Trump, said he will donate office space to Jackson’s civil rights group, the Rainbow/Push Coalition.
The high-profile, symbolic move brings Jackson into one of the last bastions of the white old boys’ network, the securities sector. Black men and women represent only 4,8% of officials and managers and 6,6% of professionals in the securities brokers and dealers of New York, according to the Equal Employment Opportunities Commission (EEOC). The EEOC is careful to point out, however, that Wall Street is no worse in this respect than most other professional organisations.
Wall Street firms are understandably touchy on the subject of race. Goldman Sachs, Merrill Lynch and Smith Barney do not like to reveal the number of managing directors who happen to be minority members, saying that such statistics mean little. Merrill Lynch, the biggest firm on Wall Street, is said to have only five black managing directors, and only three of Morgan Stanley’s 252 managing directors are black.
A senior personnel official at one of the top Wall Street firms maintains that the securities houses are always on the look- out for black business graduates from Ivy League schools such as Harvard and Yale. The common joke on Wall Street is that an African-American graduating in the top half of an MBA class could walk into any bulge- bracket firm, one of the top six securities firms in New York.
Wall Street companies also point out that they have hired plenty of Asians, particularly Indians, who have an aptitude for maths and computer skills – highly prized in derivative trading.
But the bulge-bracket firms concede that they have confined themselves to too narrow a pipeline, one that basically runs from New York’s Upper East Side to the posh schools and then to Harvard, Yale or Princeton. Belatedly, firms such as Salomon are now beginning to look further afield to universities on the West Coast, such as UCLA.
The EEOC hesitates to accuse Wall Street of out-and-out racism, for good reason. There is a distinction between an old boys’ network, where people employ others from a similar background, and a deliberate attempt to keep out particular groups. The few blacks who have penetrated the inner sanctums of Wall Street also stress that securities firms are interested only in making money, and will hire anyone who can add to the bottom line.
Buddy Fletcher, the African-American chairman of Fletcher Asset Management and one of the most successful traders on the New York Stock Exchange, argues that capitalism is fundamentally hostile to prejudice and unfair play. He says he only wants the best and brightest for his company and does not care about colour, sex or anything else.
Another African-American who climbed the heights of Wall Street was Joseph Jett, Kidder Peabody’s only black managing director until he was fired in 1994 for allegedly conjuring up $350-million in phantom profits while head of government bond-trading at the company.
The National Association of Securities Dealers in December threw out the Kidder accusations and ordered the firm to release $1-million of compensation to Jett that was tied up with the firm.
Jett is sceptical of Jackson’s initiative, and argues that the only way to break down Wall Street’s barriers is to show ability. Yet when he was dismissed by Kidder, Jett accused his employer of racism, and when Fletcher fell out with Kidder over a bonus dispute, he tried unsuccessfully to sue Kidder for racial discrimination. It is difficult to escape the sense of Fletcher and Jett wanting it both ways.
Tony Chapelle, who publishes Securities Pro, a newsletter that follows African- Americans in the securities industry, believes that blacks can help break down the barriers on Wall Street by ferreting out information on the pool of black money that is being invested. Once Wall Street firms realise that there is such a market, he contends, they will appoint African- American retail brokers to go after this pool of black money.
For Chapelle, the issue is not so much one of appointing black managing directors as of developing a black retail-investment market that will build pressure from below. He also believes that more black companies should tap into the capital markets and that there are too many small, technologically underpowered black securities firms that need to merge in order to become financially viable.
Chapelle thoroughly approves of Jackson’s guerrilla tactics on Wall Street and argues that affirmative action has proved itself in the securities industry as far as women are concerned. Where women have been promoted to senior jobs, he points out, few raise the question of whether they are qualified for the posts.