No Longer Business As Usual

A new breed of investment banker is aggressively pursuing corporate accounts and strategic alliances

African American investment firms faced a curious paradox in 1998. On the one hand, some firms thrived amid a bullish stock market, a reenergized public finance sector and increased opportunities in corporate bond underwriting — a lucrative territory long dominated by Wall Street’s top-tier brokerages. On the other hand, African American financial pros suffered last year from the same woes — and then some — that afflicted the rest of Wall Street. Mergers and acquisitions resulted in thousands of across-the-board job cuts, and black investment bankers, brokers, traders and money managers got their share of pink slips. Profits were tougher to come by and, of course, competition intensified from every possible direction.

Amid such circumstances, the mettle of black-owned firms was truly tested. In response, many businesses rose to the challenge — and some even achieved their best annual performance ever — in terms of deals managed, revenues and profits. Still, a lot of African American investment banks had to fight tooth and nail just to break even. "Access to capital remains the No. 1 problem facing black-owned broker-dealers," says Tony Chapelle, a longtime industry observer and editor of Securities Pro, a trade publication that tracks African Americans on Wall Street.

Although 1999 is certain to present the black broker-dealer community with new challenges, key players will no doubt keep marching on — several right into the record books.

Take Bernard Beal, for instance. The chairman and CEO of M.R. Beal & Co. (No. 8 on the be investment bank list) plans to allow his institutional customers to buy securities over the Internet. If M.R. Beal is successful, it’ll be the first minority-owned firm to sell fixed-income securities via the Net.

Then there’s Christopher Williams’ firm, Williams Capital Group (No. 3 on the be investment bank list), whose application for membership on the New York Stock Exchange was in the final stages at press time. This is a major feat, given the tens of thousands of broker-dealers nationwide and the less than 400 members of the NYSE. If approved, Williams Capital will be one of a handful of African American firms that have, over the past 30 years, gotten a seat on the Big Board.

But first let’s take a look at the highlights of 1998, and tell you what to expect for the rest of this year.

MUNI BONDS STAGE A COMEBACK
Perhaps one of the biggest surprises of 1998 was the resurgence of the municipal bond business. For the past five years, many observers had all but written off this area — citing slimmer profit margins, attacks on affirmative action initiatives that channeled state business to minorities and heightened competition.

To varying degrees, these factors had an impact on minority-owned firms engaged in muni operations. But none of them negate one key fact driving the muni business: more than 13,000 states, counties, cities, districts and agencies across America need an estimated $2 trillion to finance a myriad of public projects over the next few

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