There is trouble ahead for women- and minority-owned brokerage firms that concentrate exclusively on public finance business, according to a researcher who tracks their activities.
Women- and minority-owned firms that work primarily in niche markets not traditionally viewed as "minority" markets will have a better chance at success, said William Michael Cunningham, president of Creative Investment Research Inc., Washington.
Firms that have developed capabilities in underwriting and trading corporate bonds, or structuring and selling derivatives, are positioned to do well, according to Mr. Cunningham.
The Securities and Exchange Commission, as part of an industrywide review of business practices, will continue to investigate women- and minority-owned brokerage firms, said Mr. Cunningham.
"We have every reason, at this point, to believe women- and minority-owned firms are not being unfairly targeted by the SEC," said Mr. Cunningham. "Still, we expect the number of women- and minority-owned brokerage firms to continue to fall."
Several of the largest minority-owned brokerage firms encountered legal and regulatory problems in 1996, said Mr. Cunningham. "Grigsby Bransford & Co., San Francisco, fell apart under the weight of a corruption probe," he said.
The review of affirmative action programs is partially responsible for the rough times facing these firms, Mr. Cunningham said.
"Led by a public ballot initiative in the state of California, Proposition 209, public sentiment seems to have turned against these programs," said Mr. Cunningham. "In Washington, a bill (H.R. 3994) was introduced to eliminate the Small Business Administration's 8(a) Minority Business program."