The trader was freaked. It was 1994, and Joseph Jett, star bond trader at Kidder Peabody, had just been fired. That in itself wasn't surprising, he says. What was surprising was being accused of fabricating $350 million in profits by himself, and facing charges from federal agencies at the behest of Kidder's parent, General Electric (GE).
As Jett recalls in his new book, Black and White on Wall Street, he then attempted to craft a statement to read to the throng of reporters waiting outside his TriBeCa loft. But he crumpled each version into a ball and tossed it away, ultimately becoming frustrated that "each explanation of what happened at Kidder was too verbose, each wandered off into digressions about my three-year career."
Jett then relates a telling anecdote: When he finally emerged from his apartment building, those same journalists ignored him -- because they weren't expecting a black man.Jett's account of the events that led to his firing, vindication by the National Association of Securities Dealers and punishment by the Securities and Exchange Commission is much like a mixture of these two recollections. It's a lengthy harangue in need of an editor, but one filled with compelling anecdotes about what it's like to be an outsider on Wall Street. Jett writes like a trader, alternating between the frenzied, impulsive side that comes with moving billions of dollars around every day (and the expensive lifestyle that comes with that territory) and the meticulous side that's required to stare at a computer screen full of numbers all day. Unfortunately, the book contains too much of this -- such as the explanations of the convoluted accounting procedures Kidder implemented and their subsequent re-explanation during his trial -- making it often tedious to read. Jett was at the heart of the situation in the early '90s that led to the demise of Kidder. At the time the Street was suffering in the wake of several scandals and the 1987 stock market crash. In the end, he was ordered to repay $8.2 million in bonuses and a fine of $200,000 -- because, the SEC ruled, he misled Kidder, intended to commit fraud and violated the books and records provisions of the securities laws. Jett is appealing these rulings. In his book, Jett builds a compelling argument against the notion that he alone was the cause of Kidder's downfall. He admits he helped to facilitate the deceptive accounting procedures that helped Kidder hide millions in capital from GE. But he's trying to prove that he wasn't alone in doing it -- and that his managers made him a scapegoat because of his race. He's reasonably successful in making his case. It's hard to read this account and not feel that Jett was completely railroaded by GE. The NASD's summary dismissal of GE's claims bolsters his argument immeasurably. In regard to the racial question, Jett makes it clear that he did not want his race (or affirmative action programs, which he opposes vehemently) to bring him success. But his natural response to being confronted with stereotypes was to put up more barriers. He decided that he was going to effect change simply by waging and winning a war with the odds seriously stacked against him at what he describes as an inherently racist firm. Some of this approach comes across as justified: Jett says his direct superior, Ed Cerullo, had an obsession with "black male sexuality," and whether Jett was sleeping with any white women who worked in the office. As a result, Jett avoided most women completely, he said. Yet while he talks at length about the vulgar, inappropriate remarks the women in the office endured, he doesn't make it clear that he found this as offensive as Cerullo's vicious stereotyping. Jett has many detractors, and it's easy to see why as his bitterness piles up on page after page. He's clearly intelligent, but sometimes comes across as maddeningly stubborn, in such red-hot pursuit of his quest that he might border on insane. Instead of trying to find his way out of a bad situation, he focuses solely on consolidating his power. At one juncture, he confronted Cerullo about his first-year bonus by recalling the story of another black bond trader who successfully sued Kidder for racial discrimination and started a successful hedge fund. But rather than follow through with a similar plan, Jett continued to curse the darkness, letting his anger cloud his better judgment. Personal conflicts that weren't related directly to race had caused him to lose two previous jobs -- but he didn't learn from that until it was too late. Reading these anecdotes, one wonders how anyone could stand to work with him at all. Jett relates that he traded in what he calls his "trademark scowl" -- long after he was fired -- and discovered a humane side by speaking at colleges and universities and hosting a talk show. This display of humanity is refreshing, even if we only get a glimpse of it between the tales of carnage and the dreadful last quarter of the book that's largely given to droning on about the SEC trial. Now that the SEC has barred him from working as a trader, this book is his parting shot at Wall Street. (Last year, he set up his own hedge fund: the Cambridge Matrix fund.) But his personality is so combative (he begins his acknowledgements by thanking his enemies for giving him the "poison" that made him stronger) that one almost wishes he had quit while he was still $8 million or so ahead.