Former Wall Street trader with roots in the Deep South who writes about culture, America’s history of anti-Black racism, and growing up Black in the South.
Weems & Company / The Journeyman
Article originally published in The Journeyman by Marlon WeemsRead More ->
"How Starting an Investment Business Nearly Got Me Indicted
A wild, true story of finance, racism, and international money laundering.
So many prominent people get away with criminality these days that we sometimes forget that incarcerating the average American isn’t that difficult.
I’m personally familiar with how easy it is to find oneself in legal jeopardy. A few decades ago, I came dangerously close to being indicted, not because I’d broken the law, but due to a bizarre confluence of circumstances.
Only a few people know this part of my history. Those who do tell me the following story sounds like a tale from a book or a movie. Long before I began writing, people encouraged me to write a book about this episode of my life.
So about a year and a half ago, I decided to do just that. I began working on a memoir. In addition to the story that follows, the final product will chronicle my finance career, a journey that began in the early eighties in the Deep South and ended decades later on Wall Street.
The following long-form piece is not an excerpt from my manuscript, which is just under 40k words thus far, but rather a glimpse into my complete story.Although this piece is paywalled, I hope the free preview is intriguing enough for free readers to consider a paid subscription to The Journeyman.
Finally, I’m ever grateful for The Journeyman’s paid subscribers. You make it possible for me to live a writer’s life. I genuinely appreciate your continued support. ~MSW
Before I began my career on Wall Street, I lived in my hometown of Little Rock, Arkansas. I was one of the first African Americans to work in the financial services industry in the state, one of the few in the country at the time. After ten years in the business, I started my own company.
At the time, Little Rock was the political center of the universe because of the Clinton presidency. Business people, politicians, and dignitaries visited my home state en mass. I planned to seize upon the state’s notoriety by launching the first Black-owned investment company.
While this was an excellent strategy, there was one problem: I had no idea how to run a business. Because of my inexperience, I made many common entrepreneurial mistakes. Some were your garden-variety business errors, and others were due to my naïveté.
For one thing, I underestimated the difficulty of starting an African-American-owned investment firm in the South.
Growing up in Arkansas, I expected a certain degree of racism. For example, to lease the office space I wanted, I got a white friend in real estate to handle my negotiations instead of doing it in person. Still, there was more overt prejudice than I anticipated. When the building management realized they’d leased prime office space to a Black-owned business, they tried to wriggle out of my lease.
But I had other problems. I had no management training, not even a college degree. Unlike today, there were no startup incubators or accelerators to mentor me. Since I was one of the first Black folks in the country to attempt something like this, I didn’t have a blueprint to rely upon.
Since I’d been a reasonably successful bond salesman, I thought the jump to entrepreneurship would be easy. It never occurred to me that working somewhere for a long time is not the same as running a company.
Also, I didn’t have nearly as much startup money as I needed. I mistakenly thought some of Little Rock’s well-to-do African Americans would be interested in backing my startup idea, but I was wrong. When I realized no one would invest in my idea, I decided to go it alone.
I invested my life savings — about $60,000 — to get my startup off the ground. I got a loan from the Small Business Administration, heavy on equipment financing but light on working capital.
The SBA didn’t finance brokerage businesses, so to get their money, I pivoted my business model to money management to get around their rules. This was a huge mistake. I knew next to nothing about money management.
Like so many new entrepreneurs, I made tons of mistakes. I underestimated almost all my expenses. I compounded this problem by spending money on the wrong things.
I should’ve rented cheap office space and grown from there. Instead, I leased half of the 35th floor in what is now known as the Simmons National Tower—the tallest building in the state.
Instead of staying lean until I generated revenue, I paid an interior designer friend to help decorate my office. I commissioned an artist in the family to create lots of original paintings. I bought items outright that I should’ve leased.
The mobile phone was still a novelty, so I had to drop thousands on a telephone system. I was unprepared for the astronomical costs that came with long-distance phone calls.
Ultimately, I had a kickass office space with a little spectacular view. I also had a business that didn’t earn a dime for months. As if that wasn’t bad enough, another one of my mistakes almost killed my business.
Despite knowing I’d face some racism, I underestimated how bad it would be. At the time, other minority-owned startups like mine existed in states like New York and California. Because they did well, I assumed I would too.
As the first Black-owned financial services company in the state’s history, I expected a warm reception from the business community, maybe even some media coverage celebrating my accomplishment.
I was very, very wrong. It didn't occur to me that those other minority-owned firms had partnerships with big investment companies like Merrill Lynch, and I was a random Black guy in Arkansas with a bootstrapped business.
Also, I didn’t realize until it was too late that the state’s program for doing business with minority-owned companies had a couple of loopholes. The state’s goals for doing business with minorities were just that — goals. They weren’t rules or laws. No one got in trouble for failing to meet the state's minority guidelines. Also, the state’s pension funds were exempt from the guidelines anyway.
So the pension funds I expected to do business with had no pressure to send a dime’s worth of business my way. And since I’d pivoted my business model to get my SBA loan, I’d unwittingly made it easy for them to say no to me.
As it turned out, no one rolled out the red carpet for my new company. Most of the people who made promises of future business disappeared once I opened my doors. I had dozens of meetings with people who assured me of business opportunities that never materialized.
In fact, almost nothing in my original business plan came to fruition. I had to face the reality that my business was, at best, a novelty. Little Rock’s investment community was fascinated by the idea of a minority-owned investment firm, but not enough to do any business with one.
But I was too stubborn to give up. Somehow, I made it through that first year, then the second, and a third, on nothing but hustle and grit.
The newspaper article changed everything.
One day, I read a story about a large bank in the Midwest that bought a smaller bank in Conway, a small town about 30 miles outside Little Rock. The article mentioned the bank in Conway had a brokerage subsidiary. I knew the Midwestern bank already had a large brokerage operation. I wondered what they would do with the bank in Conway’s brokerage business...
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