No Longer Business As Usual - African American investment firms

Black Enterprise, June, 1999 by Lynnette Khalfani

Harold E. Doley Jr., owner of New Orleans-based Doley Securities, is even more emphatic about Jackson's influence. "The most powerful African American investment banker on Wall Street is [the Rev.] Jesse Jackson," says Doley. "He's dictating who should be included in deals and everything." Moreover, since Jackson's Rainbow/PUSH organization is buying shares in a number of Fortune 100 stocks, "his impact on corporate America is truly being felt," Doley adds.

In some ways, the mere fact that African American investment bankers are now chasing multibillion-dollar deals--with or without Jackson's assistance--under-scores a key difference between the new generation on Wall Street and its predecessors. It's a change that isn't lost on Doley. Ironically, he's even seen how his youngest son has a different attitude toward money. "If my 21-year-old son sees a dime on the ground, he won't bend over to pick it up. But I'll stop to pick up a penny," says Doley. Then, he notes: "In volume, pennies add up."

Indeed, Doley knows about counting his pennies. Using his seat on the New York Stock Exchange, he executes trades for institutional customers. Doley's cut: 2 cents a share, and in some cases a penny and a half. It may not sound as alluring as an $8 billion AT&T deal, but it's kept Doley in business for nearly three decades.

CHAPMAN ON ACQUISITION BINGE

Against this backdrop, the Chapman Co. (No. 13 on the BE INVESTMENT BANK list) is trying to make its mark on corporate America as well. Chapman, which last year became the first black investment bank to go public (Nasdaq: CMAN), is on a bit of an acquisition spree. The concern recently bought Charles Bell Securities and is seeking to buy Universal Life Insurance Co.

In addition, Chapman has partnered with insurance giant Aetna, which is providing the firm with distribution muscle. The goal: provide convenient, one-stop shopping for individual investors--whether they want to buy stocks, bonds, annuities or other financial products.

Chapman, who calls America's inner cities "domestic emerging markets," no doubt wants to service the minority community and do some brisk retail business. But his stock, which debuted at slightly above $6 a share last year, now changes hands for around $7 a piece and is thinly traded. Some people think it may have to do with Chapman being a bit too acquisitive, particularly in buying Universal Life, one of the dwindling number of black insurers in this country. (See "Seeking a New Policy for Growth," this issue.)

"I respect Nathan Chapman immensely, but he made a horrendous mistake purchasing Universal," says Doley. As of April 1, the deal had yet to close and was subject to due diligence. Critics explained that after Universal sold off its crown jewel--the life insurance division of its operations--to another firm in Houston, all that was left were fledgling health and accident insurance units.

If Chapman did miscalculate, he won't be the first to have done so--rarely in business does just one miscalculation prove fatal. Just ask Bassey, founder of Harvestons. "We have never been able to raise one single cent from a bank," he says. "All of our money is family money."