Wall Street lynching

Falsely accused of bilking millions, a black bond trader talks about the frat-boy culture of high finance.


David Bowman
May 27, 1999 8:00PM (UTC)

Joseph Jett is an African-American bond trader whose recently published memoir, "Black and White on Wall Street: The Untold Story of the Man Wrongly Accused of Bringing Down Kidder Peabody," is a real corker -- and Jett himself makes for one of the most compelling narrators I've read in years. His story begins in early April 1994, when he awoke before dawn, flipped on the TV and saw a news report accusing him of committing one of the largest securities scams in history. Jett learned that his employers, Kidder, Peabody & Co., had claimed that he'd recorded $350 million in phony profits and then bilked them of $8 million in bogus bonuses. Jett claimed he was an innocent man.

In the months that followed, Jett was vilified in the press and even fictionalized on the television show "Law & Order," all while being investigated by the Securities and Exchange Commission, the National Association of Securities Dealers and the Justice Department. Kidder, Peabody's parent company, General Electric, eventually sold the firm, attributing its exceptional losses in part to Jett's alleged rip-off. Was he guilty? By Thanksgiving 1997, Jett was cleared of the major charge against him, securities fraud (although he was sanctioned for "books-and-records violations," fined $200,000 and ordered to return $8.21 million in bonuses to Kidder, Peabody), but by then he'd become yesterday's news and he felt his vindication wasn't as widely reported as the initial charges against him. So he wrote this book. As riveting as this story is, Jett does not come off as an entirely sympathetic narrator. In fact, he's more like an anti-hero: think Clint Eastwood in "A Fistful of Dollars." According to Jett's own account, at Kidder, Peabody he functioned as a financial samurai striding through a milieu of fools.

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In person, Jett is one of the most complicated men I've ever met. Back in 1994 when the Kidder, Peabody scandal first hit, Jett made several television appearances, and he came across as an arrogant prig. In person, though, he's surprisingly delicate, otherworldly. His eyes are twice as wide as those of most other humans. He'd fit in perfectly playing an alien crew member on "Star Trek," and as we talked, it became obvious that Jett was not meant to feel at home on this planet. He may be a brilliant investor -- or just a brilliant charlatan -- but thank God he isn't an artist, or he'd surely have sliced his ear off by now. As it is, Jett continues to practice the dark art of finances with grace and humor.

The $30 billion you handled for Kidder, Peabody is equal to the GNP of some nations. It's like you were running your own small country down below the World Trade Center.

Yes, $30 billion is huge. I don't know if there are any kind of Wall Street brokers who've ever handled that kind of money. I was big. It just goes to show you there is so much negligence in the covering of this story. Reporters kept pointing out aspects of my personality that were controversial and it never occurred to them to ask, "If this guy is such a weirdo, how in the world could he handle all that money?" The question never arose. A reporter at the New York Times wrote a story sympathetic to me and said his editors nearly gave him a physical beating: "Nothing sympathetic about that guy is going to go in this paper."

So your gig was to invest this $30 billion -- but even if you lost it all, that's not illegal, right?

Exactly. What happened is I had $30 billion in assets. I was told, "We have an emergency. Liquidate your entire portfolio as quickly as possible." So I sold off everything and lost $300 million. That's a 1 percent loss, basically chump change on Wall Street. At the same time this happened to me, Orange County [Calif.] lost 40 to 60 percent of their assets, OK? I lost 1 percent. Yet I ended up on death row essentially, in terms of my career, and the Orange County officials got off scot-free.

What percentage of traders on Wall Street are black?

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One percent.

Did black traders rally around you?

No. there was no rallying around me. Even though there is a lot of pressure among black groups for diversity in the workplace, there isn't very much room for diversity in the black race if you don't affirm to the party line on affirmative action.

I took pains throughout this entire affair to never mention my race. The very idea of playing your race card -- using your race card to justify your performance -- all those things my father would never allow. I would not raise racial dynamics as an excuse in this affair until I felt I had proven myself innocent.

In your book, you talk about living your life as if you were at war. Why wouldn't you play the race card to your advantage if you could?

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Certain weapons indicate weakness rather than strength. And the race card is one of them.

Even though I was black and my accusers were white, I felt the evidence and the numbers would see me through. My lawyers very often said to me, "Next time you give an interview, don't mention affirmative action. We'd like to get Jesse [Jackson], Rev. Al [Sharpton]. Somebody to show up and get behind you." I said, "If someone asks me the question, I have to be honest."

I've been approached by a couple of Hollywood actors about this book and they say, "We have to change your character. You're not quite ... street. Can you, 'Yeah mama. Yeah, baby.' Drive a fast car." All that sort of stuff. Acting black.

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You begin the book with the ultimate 20th century experience: seeing your life on TV. First you wake up and learn that you've been accused of the biggest stock scandal in history. Then you walk out your door and a million TV reporters ignore you because they figure Joseph Jett must be a white guy.

That, I guess, harks all the way back to Ralph Ellison and "The Invisible Man" -- when I walked out of my apartment and everyone ignored me because they didn't know I was black. I still wish I could go through all the things that went through my mind. The horror. And the relief. And the "What should I do?" And the anger. Just everything. That's a bad dream that I still sometimes have.

So how arrogant are you?

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In order to be good at trading, you have to have a lot of self-confidence. But it has to be backed up by discipline that says that you actually do know what you are doing. I thought that I was doing so well that no one could touch me. I never dreamed of this idea of fraud. I didn't believe the news media would believe it. My trading volumes were just too big to make that accusation credible, so I thought.

Were your co-workers at Kidder really as monstrously crude as you described them?

The book is actually light on the nonsense that went on. I just briefly mention, for example, the farting contest. I am telling you that bets were made in the office. People would go out searching for the worst things to eat.

The reason why Wall Street can be such a great opportunity is that this type of nonsense goes on 50 percent of the time. If anyone spends just half of their time actually working, they'll take off like a rocket.

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In your book, your supervisor forbids you to fraternize with white women in the company. Do you understand that you sound a little nuts when you describe yourself walking down the hall saying, "Discipline must be maintained" any time a white woman spoke to you?

You make decisions all the time between your ambition and what makes sense. A number of people have said, "Why don't you quit -- go work somewhere else?" I didn't because Kidder was the most bottom-line oriented company. Young traders do not get opportunities like they do at Kidder. So if that opportunity meant no socializing, I was prepared to do it.

I don't like hanging out with guys. I get the sense that you're not a guy's guy either.

No. I'm a total failure at male bonding. Absolute failure.

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But Wall Street sounds like a men's locker room.

Not if you're working. I hired a number of women at my trading desk at Kidder and they felt absolutely comfortable. It was the first place that they had worked where no one said anything [offensive]. The guys knew I would fire them if they created a hostile environment. I think my desk was the only place on Wall Street where women and minorities felt that they could just be.

The culture of Wall Street is to try to create a hostile work environment so women don't want to be on the trading floor. Guys on Wall Street really don't read. They just all have Playboys sitting on their desk to say to women, "We don't want you here."

It seemed brutally painful when a female trader you brought aboard ended up screaming "nigger" at you over the telephone.

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First of all, when you live [on the Lower East Side], black people don't call each other anything but "nigger this" and "nigger that."

But a white woman saying it ...

She said it not as a white woman, but as someone who was beaten down. She was my friend who had been beaten down because of our friendship. She was forced to change her testimony. And she was lashing out at the only person she could lash out at -- me. So I bear her no ill will. She is the finest person that I have ever met. I once said to her, "No matter what happens, I will protect you." And I let her down. I did not protect her from the onslaught.

Where is that woman now?

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She works out of her home down in North Carolina. People who speak to her tell me that she hates my guts.

What are you doing now?

I have my own firm. Cambridge Matrix Funds. It's an offshore hedge fund.

Can you get back into the establishment?

Just last year I was negotiating the purchase of a brokerage firm. My desire is to create a financial empire, if you will. That's my intent.

Didn't Kidder try to steal all the dough in your bank account?

Kidder, in fact, owned my account, so they would know if I ever engaged in insider trading. But they had no more right to take my money than they would anyone walking down the street.

You got it back?

Yes. My money was returned to me.

How much?

$4.5 million.

How long did it take?

[From] 1994 to 1998.

Were those four years your time in the desert?

Ha! Well, it was one of those things where you have no choice.

How vindictive do you feel after all this?

[Thinks a moment.] The best revenge is success.


David Bowman

David Bowman is the author of the novel "Bunny Modern" and the nonfiction book "This Must Be the Place: The Adventures of the Talking Heads in the 20th Century."

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