Despite civil rights laws, demonstrations and court cases won, racial discrimination is alive, well and kicking in the good ol U.S. of A. And to make matters worse, its thriving without being checked in the corporate halls of Wall Street and in companies, large and small, in just about every major city across the country.
For people of color, speaking up may bring even more punishment, including more harassment, demotions, lack of promotions and even threats of physical harm.
Such is the case of Joseph Esser (not his real name), an African American of extraordinary talent – backed up by a stellar education – who possesses an uncanny ability to analyze and predict financial matters at an almost non-human rate.
Indeed, when it comes to the art of artificial intelligence, J.E. is a master craftsman.
Youd think that would make him a millionaire, heck, billionaire! But thanks to some very unscrupulous executives at a major financial firm, J.E. is nowhere near the financial status that begets legends of the new millennial class of multi-millionaires.
This is his story, one that is whispered too often by those afraid to step forward, those who have done everything right in terms of education, public service and believing in the American dream. Yet they remain unrecognized, unheralded and certainly not at the financial status of their Anglo counterparts, even when these people of color are smarter.
J.E.s real name cant be revealed due to the sensitive nature of his filings with the EEOC (racial discrimination), multi-million dollar lawsuit, and his complaint to the SEC (over issues of insider trading). But that doesnt make his reality any less serious and in fact, disparaging.
A Stellar Background
J.E. was born in Louisiana and raised in Texas, and wherever his family lived, his two working, professional parents always reminded him that as an African American, hed always have to work harder and be smarter.
Even after serving his country in the military, his father dealt with the ugly monster of discrimination. His wife, J.E.s mother, fought the beast as well, despite the fact that she had two college degrees.
I had great examples, J.E. says of his degree-bearing parents. But we still struggled. My dad taught me… when youre Black, you need two degrees. When youre Black, you need more.
J.E. got into mathematics at a very early age and it was obvious before he even went to school that he had acumen for numbers. After years of education, and accepting unpaid internships to gain experience, J.E. hoped his hard work would translate into financial stability and wealth. The only problem: that stability and wealth – were talking millions and millions – were being achieved by folks taking advantage of J.E.s prediction prowess while they were denying him the riches and advancement he so richly deserved.
Indeed, J.E. knows hardship, yet was never afraid of working hard. After getting into Howard, he had to transfer back to Houston because the money just wasnt there to afford to go to school away from home at the time.
But he made the best of it and graduated with a bachelors degree in finance with a minor in international business. That would eventually turn into an MBA, which he would achieve while interning and working multiple jobs, while carrying on a full academic load. Even after all that, the job pickings were slim.
Working Harder, Being Smarter Didnt Matter
Discrimination because of his dark skin color was obvious. During interviews, he was always interviewed by non-African American executives, some of which had weaker resumes. The firms seemed very interested based on his stellar academic pedigree, but once he showed up at their offices, the offers never came. It didnt just happen a few times… it happened nearly 60 times.
One day he went on the Internet and took his picture down from LinkedIn and all the social media sites he could find. Guess what? Suddenly a major firm was very interested and conducted several phone interviews based on his resume alone. And after sending them a copy of his 2013 White Paper that focused on his proprietary knowledge and techniques in advanced econometrics, commodity markets, predictive analytics, finance and methods, he finally received an offer.
But the slights based on his color were not over. Indeed, the deeper he got into the firm, the more obvious it was. He was teaching people who were supposed to be his superiors, but his pay scale and the bonuses he received were well below that of others (non-African Americans).
Even before he got in, the firm paid non-African American candidates, with fewer qualifications, signing bonuses and covered their moving expenses. The firm did not do these things for J.E. But he was eager to gain the experience and show what he could do, so he entered the company determined to make money and prove his value.
Within two short months, it was obvious that J.E. was an exceptional employee.
One person I worked around (well call him Bob) was supervised by Mrs. S (the same supervisor I had). Despite fewer credentials, Bob was paid more than me, given a signing bonus when hired and provided moving expenses, explains J.E. He was removed from his position because of poor job performance and transferred to another group. I was asked to take over all of his duties, but was not promoted.
This would become a pattern. J.E. would train others, school them on analytics, produce amazingly accurate reports and never get promoted. Sometimes he would make his superiors aware, and they would promise promotions and more credit.
Eventually, once he began providing executive leadership commodity price predictions on a highly volatile market, it would lead to insider trading by the hierarchy of the company. They would tell investors and the public one thing, while themselves selling their company stock based on J.E.s predictions.
The Results Spoke Volumes of His Ability
One day, an executive well call Jack initiated communication within the company that advised upper echelon staff members that the company has been nominated for an award based on J.E.’s work. The memo read: Happy to have Alice look at it as she and SVP Investor Relations have historically used J.E.s work in the past (as have the ELT and the Board).
This clear statement by Jack states that the ELT (Executive Leadership Team) and the Board (Board of Directors) have historically used J.E.s foresight to advise executives.
Ten days later, the VP of Communications responded to Jack after reviewing, changing and approving the award language and stated in an email to Jack and J.E. that I softened the language and removed the language about how the market intelligence team influences executive decisions by the board. I believe that is a difficult needle to thread in this environment.
The VP further stated, We can’t escape the fact that our 1Q results were out of line with our peers. So, a cynical person (and, as an ex reporter, I certainly qualify) might ask what we were doing with the market intelligence and if we should have made different adjustments.
He continues, The fact of the matter is that my team deals with external audiences who are looking solely at our performance. We have to look at reputational risks holistically and connect the dots.
In an email later on, Jack implied that the company never used J.E.s ideas for business decisions when he said, We believe now is the time to start incorporating his findings into our sales strategy for 2H 2015.
Jack said, We’re trying to avoid what happened in the past where the global marketing team produced material that was not utilized by key internal stakeholders. The last example was when J.E. predicted the fall in the market prices months before the event occurred, yet we didn’t take advantage of his foresight.
Not only was this statement untrue, it directly contradicts Jack’s earlier email. One exec went so far as to dump about $6.8 million in company stock on April 24 2015, just before the first email in early May. This is in spite of Wall Street consensus that commodity prices would remain above the forecast made by J.E. (Note, J.E. had predicted prices would begin their downward spiral by the end of April 2015.)
No Credit Where Credit Was Due
J.E.s presentations became legendary. He was asked on a regular basis to present his analysis and predictions… the only problem was that he often did not receive credit and his superiors were often promoted based on his work.
J.E. explains: No other analyst, manager, or director on the GM team had their perspective presented to the board. No other analyst was asked to present/lecture the GM team with such a high frequency. Basically, I was doing an executives role, but I was not promoted.
People came and went around him, and he more often than not qualified for their positions. But the firm seemed bent on hiring less qualified (Non-African American) candidates and ignoring the gem that was in its midst.
J.E. would complain about being left out of strategic meetings and was told it was an oversight, all the while execs in the firm clamored for his presentations/predictions.
I rightfully pointed out that the firms policies of excluding me from networking functions impacted my career opportunities and offered more evidence I was being treated differently from my non-African American peers, J.E. recalls. But his complaints would go unanswered.
The Prophet Deals with the Good, the Bad, the Ugly
Indeed, they actually reveled at his work, with some nicknaming him the prophet. That was actually put in some emails, yet the powers that be still failed to promote him or properly reward him financially.
However, the outside financial community noticed J.E.s work, especially its accuracy (well outpacing Wall Street consensus, forward curve, etc.) and it was announced he would be receiving an award. What did the firm do?
Not only did the company downplay the award, it ironically tried to claim it as its own, in spite of J.E. providing evidence of his prior invention.
The demand for J.E.s work continued, yet he rarely received credit and sometimes was belittled by the very people who took his work and presented it as their own.
During one meeting, J.E. met with directors and several VPs – all white – within a product line group and was treated very rudely. In fact, one of the directors persistently and intentionally mispronounced J.Es name and cut him off continuously while he was presenting.
It was obvious to everyone in attendance that this was done to belittle me, J.E. recalls. The manner in which I was spoken to was clearly driven by racism and by pure hatred of the fact that the director was required to listen to me. Even though he did not refer to me as a nigger, it was obvious that he was thinking it.
J.E. would bring up the unfair treatment to his supervisors, and they would promise his promotions were coming, and they never did. Meanwhile, execs and his peers were receiving six and seven figure bonuses as a result of his work, while he would receive substantially less.
And to make matters worse, the excessive work, the long hours (90+ hours a week), the stress of not being treated equally was taking a toll on J.E.
Its been hell, he admits. I have been black balled… publicly humiliated… and it all destroyed my family… I had a heart attack when I was 39… But I still persevere and push forward.
Eventually J.E. had enough. He blew the whistle, was fired by his former employer but started his own company.
His legal actions are underway and it could take possibly years for law enforcement to unravel the chicanery and deception.
According to Vernon A. McKinley, the Attorney representing J.E. in his TCR Whistleblower complaint before the SEC, This is a classic tale involving race, ignorance, corporate greed, priceless talent and the gross misappropriation of intellectual property. J.E. was not only known as the Prophet, he was the proverbial Goose Who Laid Golden Eggs.
Continued McKinley: The fact J.E. is an extremely brilliant African-American male, simply emboldenedand compelled the insiders to act upon highly accurate analytical, predictive methods and models developed by J.E. long before his employment with the company. They believed they were to wealthy and far beyond reproach of a well-educated man of color. They were dead wrong.
With the current political climate, its easy to see why these unscrupulous executives thought they could get away with the deception.
Unfortunately, McKinley continued, for these alleged insides, J.E. meticulously documented and preserved crucially compelling evidence that appears to show more than $100 million of questionable trading activity involving officers and board members during his tenure with the company, more specifically, trading of company stock based upon non-public information they derived from his models. There were no disclosures, only demands to produce more predictions.
McKinley points to SEC Rule 10b-5,codified at17 C.F.R.240.,which prohibits corporate officers, directors, or other insider employees from using confidential corporate information to reap a profit (or avoid a loss) by trading in the companys stock. This rule also prohibits tipping of confidential corporate information to third parties.
According to McKinley, Rule 10b-5s application goes considerably beyond just officers, directors and principal stockholders. This rule also coversany employee that has obtained material non-public corporate information, as well asany person who has received a tip from an insider of the company concerning information about the company that is material and nonpublic, and trades (i.e. purchase or sells) the companys stock or other securities.
States McKinley, In Ernst&Ernstv.Hochfelder,425 U. S. 185, 214, the U.S. Supreme Court held that under the traditional or classical theory of insider trading liability, a violation of Section 10,(b) and Rule 10b-5 occurs when a corporate insider trades in his corporation’s securities on the basis of material, confidential information he has obtained by reason of his position. Such trading qualifies as a deceptive device because there is a relationship of trust and confidence between the corporation’s shareholders and the insider that gives rise to a duty to disclose or abstain from trading.(Seealso,Chiarella v. United States,445 U.S. 222 (1980);United States v. O’Hagan,521 U.S. 642 (1997).
The bitter taste of being treated like a second-class citizen still remains.
When I chose this field (analytics), I did it because I thought it was a way to prove my value. It focuses on what you can accomplish as an individual… but it didnt work out for me… it did work out that way for non-African Americans, though, he says.
In spite of his trials and tribulation, though, J.E. learned an important lesson: The more knowledge I gained, the more I was being resented.