Wall Street’s Fear of a Black Quarterback
Wall Street’s Fear of a Black Quarterback
To understand the financial services industry’s problems with race, just look at the NFL
This essay is the second of a two-part series on racism in the financial services industry.
Last summer, I wrote about starting an investment firm in Arkansas in the mid-nineties. I wrote about the racism I faced. Without question, I had many successes. My company was the state’s first — and possibly the last — black-owned investment firm. It was the first Black-owned company to serve as an underwriter in a City of Little Rock municipal bond issue.
But despite those achievements, running the business was a struggle. After about five years, I closed my investment firm. Racism wasn’t the only reason, but it played a role in my decision. The fact that there hasn’t been another Black-owned investment bank in Arkansas in the twenty-plus years since I left the state tells me I probably made the right call.
I spent the last part of my career in finance — over thirteen years — working in Manhattan, a place most would consider pretty liberal. While that may be true, I was surprised by the racism I encountered. My story isn’t special or unique. I suspect almost any Black person who works in financial services or on Wall Street probably has a story about the racism they dealt with during their careers.
Perhaps the best way to understand the way Wall Street views minorities is with a few football analogies.
Just like the NFL, Wall Street has a Rooney Rule
Wall Street’s record on race reminds me of the NFL’s Rooney Rule. For the folks who don’t follow football, the Rooney Rule is named after Dan Rooney, the late owner of the Pittsburgh Steelers. The rule requires that any NFL team making head coaching or senior hires interview at least one ethnic minority for the position.
But even though the Rooney Rule has been around since 2003, the white folks who own and manage NFL teams are bumfuzzled about how to stop hiring so many white coaches and managers. Even though nearly 70% of the league’s players are Black, diversity is a puzzle they can’t seem to solve.
But if you ask the people like Brian Flores, who sued the NFL and several of its teams earlier this year, my guess is that he’d tell you that the Rooney Rule is a joke.
Although they won’t admit it, the mostly white, primarily male folks running big-name financial services companies play a shady game similar to the NFL’s Rooney Rule. They swear that they’re making every attempt to diversify their ranks. But as with the NFL, none of these otherwise intelligent people can seem to figure out how to stop themselves from hiring so many people who look like them.
Merrill Lynch Wealth Management is one of the firms supposedly trying hard to increase its diversity. But despite their efforts, only 780, or 4.5%, of the company’s 17,500 financial advisors were Black in 2020. Since their previous number was just 2.5%, I suppose that’s progress.
Wall Street views Black traders the way the NFL used to view Black quarterbacks
It’s difficult to imagine now, but Black quarterbacks in the NFL were virtually nonexistent when I was a kid. Not long ago, the consensus among NFL coaches and owners was that Black athletes lacked the intellect or leadership skills to play quarterback.
Eventually, a few Black players got a chance to prove themselves in the NFL. One of those men was a quarterback named Doug Williams. When Williams became the first Black quarterback to start in and win a Super Bowl, it forced NFL owners and coaches to rethink their racist theory regarding Black quarterbacks. It took a while, but when you see Black quarterbacks playing in the NFL now, it’s almost a non-event.
Similarly, minorities were shut out of the finance industry for years. Then, as in the NFL, a few Black people got the chance to prove themselves. I was one of those individuals.
In the early 1990s, a few big investment banks even put money into investment firms managed by Black finance professionals. But while there was progress, one area got overlooked. Wall Street didn’t mind a Black person selling stocks or bonds, but doing the actual trading was another story.
It’s important to understand that in finance, a trader, especially the head of a trading operation, holds enormous sway at a Wall Street investment bank. The head trader functions like an NFL quarterback, even at a small firm. Traders are expected to read markets like a good quarterback reads a defense.
When clients want to know why the bottom is falling out of the market or how to interpret an economic number, they don’t call the firm’s CEO or an investment banker. They call the trading desk. A good head trader is the financial services equivalent of Tom Brady. And like NFL quarterbacks in Doug Williams’s day, head traders are rarely Black.
That’s because Wall Street views Black traders like the NFL treated Black quarterbacks.
The unspoken sentiment in the investment community is that the majority of Black financial services professionals, to borrow from Al Campanis (who blew up his career as general manager of the Brooklyn Dodgers by spouting racist stereotypes during an interview with Ted Koppel), a large segment of the financial services establishment believes Black people “don’t have the necessities” to excel as traders.
When I became the head of a trading desk in 2005, of the hundreds of minority professionals working on Wall Street, I think there were only four Black head traders. You'd be wrong if you think I got my job as a head trader because I worked at a Black-owned investment bank. That’s because, at the time, all the head traders at other minority-owned firms were white.
A guy from one of those firms once told me, without a shred of irony, that their firm’s head trader was white because “white customers want to deal with someone who looks like them.” Even though his firm was Black-owned, rather than rejecting the stereotype, they went along.
During the financial crisis, thousands of people on Wall Street lost their jobs. One of these casualties was a guy who worked for an asset management firm with whom I’d tried to do business for years. Before losing his job, this person constantly blocked my desk from doing trading business with his employer. He wouldn’t even introduce me to his firm’s traders.
To my surprise, he reached out to one of my colleagues on the desk a few months after losing his job. His new role was to convince trading desks to route their trades through his company’s electronic infrastructure. Suddenly, the tables were turned. Now he wanted my desk to do business with him.
This is not uncommon. Securities trading, especially the electronic variety, is an expensive proposition. The cost of my desk’s trading platform alone was $35,000 a month. Because the expense of running an equity trading desk can be enormous, many small brokers outsource their trading business to firms like the one where this guy worked.
But that wasn’t my situation. I’d built a sophisticated algorithmic trading operation. We dealt in numerous markets, from global equities to currencies. My trading platform could trade hundreds of stocks simultaneously while implementing complex algorithmic strategies. But as a professional courtesy, I decided not to treat this fellow like he’d treated my colleagues and me. I took a meeting with him.
As I listened to his presentation, it was apparent that it made no sense to pay his firm to do what we could do ourselves. When he’d finished his pitch, I asked him why I should send him my trading business since my desk was more sophisticated than his. He answered my question with the racism you seldom hear out loud, especially on Wall Street.
He said, “Because you guys are a minority firm, so, you know, you can’t really trade.”
I wish I could say this was the first time I’d heard a white person unconsciously say something racist in my presence, but it wasn’t. I’ve worked around people like the man in that meeting my whole life. They’re the kind of people who think all Black people can dance, that we’re all naturally athletic.
His comment confirmed something we Black people often suspect but rarely can prove. My desk’s inability to do business with this person’s former employer was due to this individual’s racist mentality. As far as he was concerned, my decades of experience didn't matter. Neither did my $ 35,000-a-month trading platform. What mattered to him was the fact that I was Black. And everyone knows Black people can’t trade.
As I sat there, thinking of how to respond, a colleague in the meeting kicked me under the conference room table. Apparently, my anger was showing. But instead of losing my temper, I did the next best thing. Until then, I’d given up on ever trading with his former employer. But after our meeting, I decided to give it another shot.
This time there was no racist gatekeeper between me and their trading desk. And like Doug Williams back in the day, I finally had a chance to prove myself. This time things were different. Not only did they meet with me, but they also became one of my best clients.
It didn't matter to them that our firm’s trading desk had a Black quarterback.
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