Wednesday, August 28, 2013

Muriel Siebert: Wall Street Pioneer

Siebert: A career of firsts
Many people on Wall Street who knew Muriel Siebert well called her "Mickie."  Other people who interacted with her or conducted business with her firm knew about the Chihuahua dog that always tagged along. The dog even shared her office and sometimes interrupted meetings, often scrambling around the office craving attention. Visitors wouldn't dare complain.

On the Street, everybody familiar with her knew about her long career of firsts--the first woman to become a member of the New York Stock Exchange, the first woman to become New York State's top banking regulator, one of the first to found her own brokerage firm, and arguably the first icon in the securities industry for all the women who've followed behind.

They knew, too, about her dogged, determined ways, her bold, sometimes brash manner in speaking up on behalf of women. She thrived in one of the most recalcitrant environments, where men ruled the industry as if it were a college fraternity. From the moment she decided to make a living selling stocks and bonds, she battled old-boys clubs that blatantly disregarded pleas from women and minorities who wanted to crack the core.

Siebert, who died this month at 84 in New York, rubbed Wall Street men the wrong way--not because she wanted to, but she might have felt she had to. She spoke her mind and fussed about gestures and traditions that offended women. (The story is told often about the big ado she made about getting a women's room near the New York Stock Exchange dining room.) The doors she knocked down opened slightly, but only after relentless pounding. In later years, she never hesitated to toot her horn, recount her accomplishments, and remind all within earshot that we were only at the 20-yard-line in a 100-yard dash.

(The sprint for fairness and opportunity continues. Amidst announcements of her death come reports in late August that Merrill Lynch, now part of Bank of America, is settling a long-running lawsuit with black brokers in its retail network for amounts over $150 million.)

After gaining the stock-exchange membership in 1967, she set out on her own, choosing not to tackle the manly bureaucracies at the major brokerage houses of that time (the Paine Webbers, Merrill Lynches, and E.F. Huttons), if those houses would even offer her employment opportunity. She established her own small brokerage firm, eventually reorganizing it as a "discount brokerage house," where she peddled stocks at discount commissions--not bothering to expand into other securities businesses (corporate finance and trading), preferring to stick to what she knew best.

For years, her brokerage firm Muriel Siebert & Co. (and its incarnations through the years) operated within that niche, fortunate to survive in a tough industry, going head to head with bigger, more-capitalized firms that featured, of course, armies of old-school, male brokers. Over time, she eventually took the firm public (Siebert Financial Corp.) and ventured into philanthropy to give back and support other women following her path.

Nonetheless, not many know how she clamored and pushed for progress in other ways.  Late in her career, she formed ties with Napoleon Brandford and Suzanne Shank, senior African-American bankers in municipal finance.  When she decided to expand into municipal finance in 1996, her firm invested in a new affiliate partnership, Siebert, Brandford & Shank, now one of the top minority-owned banks in municipal finance. With more capital, they could win more business and rise higher in underwriting syndicates and tables.  She exploited their connections and experiences in municipal finance, while they took advantage of new capital and the "Siebert" brand.

Siebert fought, struggled and pouted until the end--likely still perturbed by slow progress across all sectors of brokerage and banking in big banks, in hedge funds, in small regional brokerages, and at asset-management companies.

Goldman Sachs this year announced a new slate of partners and managing directors--bankers, traders, and managers at the top echelon, the ones who run business units, make decisions about strategy and expansion, and the ones who reap the most in compensation. Only 14% of the new partners (managing directors with large ownership stakes) were women; only 23% of the new managing directors (those without promised large stakes) were women.  At Morgan Stanley, only 17% of new managing directors were women.

Siebert would not have been satisfied, would have been puzzled about such numbers in 2013, and in Siebert-like fashion might have picked up a phone and scolded the CEOs of those firms or might have whispered her disappointment sternly in a corner at Wall Street charity dinner.

Over 45 years, Siebert "leaned in" and pinched a few nerves, ruffled the cuffs of many securities-industry leaders, and griped about unfair practices and unfavorable opportunities for women. Like many pioneers, she worried less about being liked, worried more about progress.

Tracy Williams

See also:

CFN:  Making Demands on Diversity, 2013
CFN:  Getting Pushed Back, While Leaning In, 2013
CFN:  MBA Diversity: A Constant Effort to Catch Up, 2012
CFN:  Making Markets in Her Home Country, 2009

Tuesday, August 20, 2013

August: No Time for Doldrums

Market events mean no time for rest?

If history repeats itself or if tradition rules, then the waning days of summer in finance and markets should be marked by doldrums, inactive markets and dreading Labor Day.

But once again August has thrown a soft curve ball--with market volatility, big institutions confronting legal issues, and a band of activist shareholders causing havoc in boardrooms. Nothing that has caused market nightmare, but enough to cause a little upheaval in what should be dull days before mid-September.  The Augusts of 2011-12, recall, were upended by disgusting debates in U.S. Congress about government deficits and debt. 

The tale of the "Whale" and the $6 billion in trading losses at JPMorgan from 2012, events we thought had faded from everybody's attention, plopped up again when government regulators and law-enforcement officials decided to place criminal charges against some banks officials for hiding information about the losses and acting in deceitful ways.  The irony is the "Whale" himself, the JPMorgan trader in London who presided over the disastrous trading positions, is not a target.  JPMorgan likely suspected some action of this kind would occur, but it didn't expect the whole matter would resurface in late-summer business headlines, forcing the bank once again to rehash, review and remember the whole dreadful episode.

William Ackman, the tenacious shareholder activist whose bold charges and boardroom moves attract constant media attention, raised his surrender flag this month with J.C. Penney.  Ackman and his Pershing Square Capital fund were instrumental in implanting Apple-groomed CEO Ron Johnson, who was supposed refashion JCP into the retail-industry version of Apple-like merchandising. The Ackman-backed experiment failed miserably, the JCP CEO resigned, and Ackman became a pariah in that boardroom.  He gave up in August, resigned from (or was shoved off) the board, and resumed his shareholder fights elsewhere--at Herbalife. 

Ackman has charged that company (Herbalife) in running a Ponzi scheme in selling its product, and various sides have taken up the debate:  Is Herbalife a legitimate company, a reasonable growth investment? Or is it administering a fraudulent marketing scheme? The skirmish continues.

Commodity activities have plagued big banks Goldman Sachs and JPMorgan this summer, and unexplained volatility is not the reason.  Business reporters (first at the New York Times) discovered questionable practices by Goldman in aluminum markets, where Goldman receives fees for warehousing aluminum before final sales to end-users. Goldman is alleged to conduct a practice of delaying the transport of aluminum by transferring it from warehouse bin to bin for no apparent reason except to prolong fee collection.

The wreckage of mortgages and assembling mortgage securities won't go away for many top banks. This summer, Bank of America, still being knocked over for acquiring Countrywide in the midst of the crisis, is wrestling with legal accusations and possible settlements--in the tens and hundreds of millions. 

Elsewhere, regulators accused JPMorgan for deceptive pricing behavior in West Coast electricity markets.  Energy regulators accused the bank of unfair mark-ups in electricity prices in related trading activity.  JPMorgan and regulators agreed to a settlement, but the entire episode was enough to spur the bank to move quickly, reorganize and rethink its commodities-trading business. It opted to withdraw from physical-commodities businesses--businesses it had inherited from Bear Stearns.

After a remarkable first-seven months run, equity markets have begun to rumble and shudder, mostly because market-moving investors prefer to pay much attention to hidden messages coming from the Federal Reserve.  Every hint that the Fed plans to stop purchasing bonds that will keep interest rates low leads to gyrations in stock markets. That's the way the markets move these days.

And while it was transforming itself into a model citizen for regulators, JPMorgan was pummeled once again when the SEC announced it was investigating the bank for nepotism, hiring sons and daughters of well-connected Chinese executives and government officials.  No doubt senior bankers in CEO Jamie Dimon's circle are puzzled about a finance-industry practice that has taken place since, well, stock-market traders consummated transactions around a tree in downtown, 19th-century Manhattan.

Perhaps these days, it's all  the new normal--abetted by the Internet, technology, immediate access to market updates and everybody's ability to reach out to anybody anytime.  There might have been a time when all bankers, traders, compliance officers, deal-doers, and research analysts escaped en masse in August.  But nowadays regulators and enforcement officials don't take a break.  High-frequency traders and hedge-fund managers don't let up in summer.  Shareholder activists don't ease the pressure, and board rooms, CFOs, and investment-managers don't have the luxury of summertime doldrums anymore.