Buddy Fletcher
Encyclopedia
Alphonse "Buddy" Fletcher, Jr. (born 1965) is an American trader
and money manager. Fletcher began his career as a quantitative equity trader at Bear Stearns but first became noticed when he sued Kidder, Peabody & Co.
for racial discrimination and US$3 million in back pay. He eventually won an arbitration award of US$1.3 million.
. His father Alphonse Sr. was a technician at the Electric Boat Corporation
in Groton
, a company famous for making submarines; his mother Bettye, a long-time teacher
and later a social worker, a Dean
, and school principal, received a Ph.D.
in Education from Teachers College, Columbia University
. Fletcher has two younger brothers. His brother Geoffrey S. Fletcher
is the first African-American to win an Academy Award for screenwriting. Fletcher attended public schools in Waterford.
He attended Harvard College
where he received an A.B.
degree as an applied mathematics
major in 1987. He was elected first marshall (class president) of the 1987 class. He earned a Master’s degree in Environmental Management from the Yale School of Forestry and Environmental Studies in 2004. While an undergraduate student, he was enrolled in the United States Air Force
Reserve Officers' Training Corps
Aerospace Studies Program at the Massachusetts Institute of Technology
. Upon graduation, he was commissioned as a second lieutenant
and served in the United States Air Force Ready Reserve until his honorable discharge in 1997.
Fletcher has lived on the Upper West Side
in The Dakota
In 2007, Fletcher married Ellen K. Pao, a partner at venture capital firm Kleiner Perkins Caufield & Byers and, along with Fletcher, a Crown Fellow at the Aspen Institute
.
Fletcher and Pao have one daughter.
Prior to his marriage to Pao, Fletcher lived with his partner Hobart V. Fowlkes Jr. on the Upper West Side. Fowlkes, a current employee of Fletcher Asset Management has said, "Human beings aren't so simple that you can characterize them as straight or gay." Fowlkes is further cited as Fletcher's companion in the Harvard Gay and Lesbian Caucus's announcement of Fletcher's selection as recipient of the organization's 2005 Civil Rights Award.
that the race track
extracted, his work was not profitable but taught him valuable lessons about odds, probabilities and pricing.
One of his college internships was with Pfizer
, where through the employee stock ownership program he began to focus on the principle that favorable pricing can compensate for volatility.
who capitalized on dividend
-related arbitrage in the options
department. He was recruited to Kidder Peabody as a trader in the equity trading group. After his tenure at Kidder Peabody he founded Fletcher Asset Management. Fletcher Asset Management makes supportive investments in mid-sized public companies. After Fletcher’s 2010 investment in a regional bank and purchase of many of the bank’s troubled assets, experts noted that the deal was unusual and potentially groundbreaking because Fletcher invested in the bank by buying shares, essentially becoming a part owner.
in 1994 as the top earning member of their thirty talented individuals under the age of thirty. During the firm's first four years, it traded with heavy leverage
. When he founded his firm as chairman and CEO, he located it on the 48th floor of the General Motors Building
on Fifth Avenue. Fletcher had audited returns of 471% in 1992 and 177% in 1993, and unaudited returns of 267% in 1994 through August 31. During his first five years in business after founding his firm in 1991, the firm's audited annual returns were 350%. His general strategy was trading public instruments for his own account and on behalf of clients, but he also made longer-term equity investments. He used hedges
with both types of investments. He has also been involved in PIPE deals.
His firm's trading activity at one time occasionally accounted for 5% of the volume on the New York Stock Exchange
, and former boss and mentor Alan Greenberg
described him in 1998 as a smart winner. In 1994, Fletcher surrendered his broker-dealer
registration and became a registered investment adviser, which made managing money more convenient. Although his firm has thrived, he had never dreamed of entrepreneurial enterprise and had hoped to be a GE executive someday.
(GE). As part of his relationship with Kidder Peabody, the company agreed to pay him one quarter of the profits that he made for the company, but when he earned the company $25 million, they only paid him half of the amount promised. He sued for the other half ($3 million in back pay). In addition to the pay dispute, he filed a $5 million (plus punitive damages
) discrimination suit. Fletcher claimed the company had kept their promise to white employees and claimed racial discrimination because white employees were paid more generously for similar work. Alleging a violation of State Human Rights Law, Fletcher filed a discrimination claim in the New York State Courts. The New York Supreme Court, Appellate Division
ruled that an arbitration panel would hear his case.
Jurisdiction in the case was a hotly contested matter. In the Individual Assignment System (IAS) of the New York Supreme Court
, Fletcher sued Kidder Peabody under the New York State Human Rights Law, alleging racial discrimination in employment in violation of Executive Law § 296(1)(a). In response, Kidder Peabody moved to stay the judicial proceedings and compel arbitration on the basis of the broad arbitration clause that Fletcher had signed as part of his securities exchange registration applications. Kidder Peabody contended that the Federal Arbitration Act
(FAA), which preempts state law, mandated enforcement of Fletcher's promise to submit "controversies ... arising out of [his] employment" to arbitration. The IAS court denied the motion, reasoning that "it would be against public policy to contract in advance for a waiver of the right to obtain judicial redress of alleged racial discrimination." The New York Supreme Court, Appellate Division
, however, "reversed and granted the requested relief after concluding that the FAA and the cases decided under that statute mandated enforcement of [Kidder Peabody's] arbitration agreement". The United States Supreme Court declined to hear the case. Fletcher eventually won an arbitration award of $1.3 million.
1992, Fletcher purchased a first-floor apartment at the Dakota in New York City. Fletcher was only the second African-American approved to buy an apartment in the century-old building, and the Dakota had previously rejected three other applications of his .,
A year later, Fletcher attempted to purchase another, larger apartment, this one on the Dakota’s fifth floor. As a condition of approving the purchase, the Dakota board required him to immediately sell his first-floor apartment and prohibited him from using the first-floor apartment for any purpose until its sale became final. According to Fletcher, the Dakota board did not impose these restrictions on any other residents, and, consequently, they became known around the building as the “Buddy Rule.”
In 2002, Fletcher sought to buy a two-room, ninth floor apartment at the Dakota for his mother. The board approved the sale, but again imposed a number of conditions on Fletcher, including that he use a trust to buy the apartment and prohibiting anyone other than Fletcher’s mother—including relatives—from staying overnight in the apartment.
In 2010, Fletcher signed a contract to purchase apartment 52 at the Dakota, intending to combine this apartment with his existing fifth-floor apartment. The purchase was to be a $5.7 million all-cash transaction, and Fletcher agreed to prepay over $400,000 in maintenance fees. In connection with his application to purchase the apartment, Fletcher states that he submitted hundreds of pages of documents regarding his own finances and those of Fletcher Asset Management. The Dakota board, however, rejected Fletcher’s application.,
Fletcher then filed a lawsuit in New York State Supreme Court against the Dakota, a number of its directors, and others, alleging that the defendants had defamed him and engaged in unlawful self-dealing, unlawful discrimination, and inappropriate retaliation. His complaint cited other incidents where the Dakota board had allegedly discriminated against other minorities. For example, the complaint cited one board member’s comments that two applicants were part of the “Jewish mafia” and a board member’s suggestion that the Spanish actor Antonio Banderas had applied to purchase a first-floor apartment at the Dakota “so that he could ‘more easily buy drugs on the street.’” The Dakota ultimately rejected the application by Banderas and his wife, actress Melanie Griffith.
The co-op board filed a 237-page response that denied Mr. Fletcher's claims and said he simply lacked the wealth he claimed. According to the New York Times, the response was noteworthy in that it is rare for any co-op board, let alone a famous one, to disclose internal matters.24 Although Mr. Fletcher is a well-known investor, the board, citing tax returns such as his 2009 income of $674,000, bank records and other documents that he submitted when applying to buy the $5.7 million apartment, called his statement of net worth "highly unrealistic." The article also reported defendants’ claim that the money Mr. Fletcher claimed to manage was "greatly inflated" because his firm, Fletcher Asset Management, double-counted its assets, which Mr. Fletcher said was $429 million, according to the court filing. And because the firm reported a cumulative net loss from 2007 to 2009, the Dakota's finance committee called the value that Mr. Fletcher put on his business "not credible." The board also was concerned that Mr. Fletcher supplied information through an accounting firm that appeared to be independent but was actually run by one of his employees. The response questioned whether Mr. Fletcher could afford another apartment when his total annual maintenance cost would rise to $228,873 and renovations would cost $1 million to $2 million. Fletcher had offered cash for the transaction, more specifically, last spring Fletcher entered into a contract for the all-cash purchase of apartment 50, with the apartment's owner, free of any financing contingency.
Fletcher responded to the Board’s claims by stating that the Board had ignored and deliberately misrepresented extensive, independent documentation of his financial strength as well as expert reports calculating his net worth at over $80 million. In a March 2, 2011 affidavit he explained “‘that Fletcher Asset Management is in excellent financial health.’” Among other things, the affidavit noted that Fletcher’s valuation of Fletcher Asset Management was based on well-accepted, standard approaches to valuing asset management companies and that Fletcher Asset Management had continued paying dividends averaging more than $4,500,000 a year during the financial crisis. Furthermore, the affidavit also noted that—although the defendant board members claimed to be financial experts—they appeared to miss the fundamental principle that, for a S Corporation such as Fletcher Asset Management, reported income was not an appropriate measure of the corporation’s overall strength. The affidavit also recounted Fletcher’s unprecedented disclosures to the Dakota board in connection with his application to purchase apartment 50 as well as prior admissions by board members that their concerns about Fletcher’s finances were overwrought.
The case remains pending in New York State court.
s to the New York State Legislature in January 2007 for the position of New York State Comptroller, although eventual selection was Thomas DiNapoli
.
The possibility of Mr. Fletcher’s public service caused one lawmaker to say he “will be hard to say no to” and the media took note of the “Harvard-educated, black millionaire philanthropist with plenty of financial experience. Just the sort of financial expert Eliot Spitzer’s people were looking for. Fletcher’s sporadic history of voting and registering to vote, speculated some, “seems to indicate a certain indifference to politics" and it was noted that he had rarely voted in either federal or state elections and had registered previously as both a Republican and an Independent.
, Fletcher donated $1 million to the Reginald F. Lewis Memorial Endowment. The endowment had been created by the National Association for the Advancement of Colored People
after Lewis instructed his wife to bequeath $2 million to the organization.
In 1996, to commemorate the 100th anniversary of Plessy v. Ferguson
, , Fletcher endowed a University professorship at Harvard College with a $4.5 million dollar donation. The Alphonse Fletcher, Jr. chair belongs to a special category of endowed positions established in 1935 as Harvard's highest professorial distinction. The chair was intended to be held, "whenever possible, by a faculty member from one of the professional schools who is devoted to teaching and research about contemporary moral, religious, and social values, and whose interests include undergraduate education." Before leaving for Princeton University
, Cornel West
held this chair. In 2006, Henry Louis Gates, Jr.
became the Fletcher University Professor.
In 2004, to commemorate the 50th anniversary of Brown v. Board of Education
, , Fletcher pledged $50 million to create the Fletcher Foundation
to give money to institutions and individuals working to improve race relations. The pledge, if it eventually becomes a donation, would rival prior gifts by Oprah Winfrey
and Bill Cosby
as one of the largest ever by an African-American. The fellowships are awarded to individuals who improve race relations in a manner that promotes the broad social goals of the Brown v. Board of Education decision that outlawed segregation
in public schools. The $50,000 fellowships are awarded to educators, lawyers, scientists, artists, economists, writers, doctors and others. He has since endowed the Alphonse Fletcher Sr. Fellowship program at Harvard, named after his late father.
In 2006, Fletcher was part of a consortium of individuals who created a $50 million Professorship Challenge Fund at Harvard University. The fund provides matching funds that encourages gifts to endow named professorships and provide faculty support across the University.
New York City "Entrepreneur of the Year", 2002 Sponsors for Educational Opportunity "Leadership Award", 2004 United Negro College Fund
"Extraordinary Black Man Award", 2005 Harvard University Gay and Lesbian Caucus "Civil Rights Award", and 2006 Morehouse College
"Candle in the Dark". In explaining why he had been awarded the 2005 Harvard University Gay and Lesbian Caucus award, Tom Parry, president of the HGLC, said that Fletcher had distinguished himself, not just as a philanthropist but as someone who had worked tirelessly to further the causes of equality and racial justice.
, the New School for Social Research, and the Public Theater/New York Shakespeare Festival
. He has been the United Negro College Fund
New York campaign chairman.
Trader (finance)
A trader is someone in finance who buys and sells financial instruments such as stocks, bonds, commodities and derivatives. A broker who simply fills buy or sell orders is not a trader, as they are merely executing instructions given to them. According to the Wall Street Journal in 2004, a managing...
and money manager. Fletcher began his career as a quantitative equity trader at Bear Stearns but first became noticed when he sued Kidder, Peabody & Co.
Kidder, Peabody & Co.
Kidder, Peabody & Co. was a U.S.-based securities firm, established in Massachusetts in 1865. Its operations included investment banking, brokerage, and trading....
for racial discrimination and US$3 million in back pay. He eventually won an arbitration award of US$1.3 million.
Personal and education
Fletcher was raised in Waterford, ConnecticutWaterford, Connecticut
Waterford is a town in New London County, Connecticut, United States. It is named after Waterford, Ireland. The population was 19,152 at the 2000 census. The town center is listed as a census-designated place .-Geography:...
. His father Alphonse Sr. was a technician at the Electric Boat Corporation
Electric Boat Corporation
The General Dynamics Electric Boat is a division of General Dynamics Corporation. It has been the primary builder of submarines for the United States Navy for over 100 years....
in Groton
Groton, Connecticut
Groton is a town located on the Thames River in New London County, Connecticut, United States. The population was 39,907 at the 2000 census....
, a company famous for making submarines; his mother Bettye, a long-time teacher
Teacher
A teacher or schoolteacher is a person who provides education for pupils and students . The role of teacher is often formal and ongoing, carried out at a school or other place of formal education. In many countries, a person who wishes to become a teacher must first obtain specified professional...
and later a social worker, a Dean
Dean (education)
In academic administration, a dean is a person with significant authority over a specific academic unit, or over a specific area of concern, or both...
, and school principal, received a Ph.D.
Ph.D.
A Ph.D. is a Doctor of Philosophy, an academic degree.Ph.D. may also refer to:* Ph.D. , a 1980s British group*Piled Higher and Deeper, a web comic strip*PhD: Phantasy Degree, a Korean comic series* PhD Docbook renderer, an XML renderer...
in Education from Teachers College, Columbia University
Teachers College, Columbia University
Teachers College, Columbia University is a graduate school of education located in New York City, New York...
. Fletcher has two younger brothers. His brother Geoffrey S. Fletcher
Geoffrey S. Fletcher
Geoffrey Shawn Fletcher is an American screenwriter, film director, and adjunct film professor at Columbia University and New York University's Tisch School of the Arts in New York City, New York...
is the first African-American to win an Academy Award for screenwriting. Fletcher attended public schools in Waterford.
He attended Harvard College
Harvard College
Harvard College, in Cambridge, Massachusetts, is one of two schools within Harvard University granting undergraduate degrees...
where he received an A.B.
Bachelor of Arts
A Bachelor of Arts , from the Latin artium baccalaureus, is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, the sciences, or both...
degree as an applied mathematics
Applied mathematics
Applied mathematics is a branch of mathematics that concerns itself with mathematical methods that are typically used in science, engineering, business, and industry. Thus, "applied mathematics" is a mathematical science with specialized knowledge...
major in 1987. He was elected first marshall (class president) of the 1987 class. He earned a Master’s degree in Environmental Management from the Yale School of Forestry and Environmental Studies in 2004. While an undergraduate student, he was enrolled in the United States Air Force
United States Air Force
The United States Air Force is the aerial warfare service branch of the United States Armed Forces and one of the American uniformed services. Initially part of the United States Army, the USAF was formed as a separate branch of the military on September 18, 1947 under the National Security Act of...
Reserve Officers' Training Corps
Reserve Officers' Training Corps
The Reserve Officers' Training Corps is a college-based, officer commissioning program, predominantly in the United States. It is designed as a college elective that focuses on leadership development, problem solving, strategic planning, and professional ethics.The U.S...
Aerospace Studies Program at the Massachusetts Institute of Technology
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
. Upon graduation, he was commissioned as a second lieutenant
Lieutenant
A lieutenant is a junior commissioned officer in many nations' armed forces. Typically, the rank of lieutenant in naval usage, while still a junior officer rank, is senior to the army rank...
and served in the United States Air Force Ready Reserve until his honorable discharge in 1997.
Fletcher has lived on the Upper West Side
Upper West Side
The Upper West Side is a neighborhood in the borough of Manhattan, New York City, that lies between Central Park and the Hudson River and between West 59th Street and West 125th Street...
in The Dakota
The Dakota
The Dakota, constructed from October 25, 1880 to October 27, 1884, is a co-op apartment building located on the northwest corner of 72nd Street and Central Park West in the Upper West Side of Manhattan in New York City...
In 2007, Fletcher married Ellen K. Pao, a partner at venture capital firm Kleiner Perkins Caufield & Byers and, along with Fletcher, a Crown Fellow at the Aspen Institute
Aspen Institute
The Aspen Institute is an international nonprofit organization founded in 1950 as the Aspen Institute of Humanistic Studies. The organization is dedicated to "fostering enlightened leadership, the appreciation of timeless ideas and values, and open-minded dialogue on contemporary issues." The...
.
Fletcher and Pao have one daughter.
Prior to his marriage to Pao, Fletcher lived with his partner Hobart V. Fowlkes Jr. on the Upper West Side. Fowlkes, a current employee of Fletcher Asset Management has said, "Human beings aren't so simple that you can characterize them as straight or gay." Fowlkes is further cited as Fletcher's companion in the Harvard Gay and Lesbian Caucus's announcement of Fletcher's selection as recipient of the organization's 2005 Civil Rights Award.
Investment education
Fletcher's first experience with investment, risk and return occurred when he was in junior high school. He and his father developed a computer program to determine dogs to invest in at the dog racing tracks. His program was able to select dogs that would win place or show, but due to the odds of the dogs it was selecting and the commissionCommission (remuneration)
The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold...
that the race track
Race track
A race track is a purpose-built facility for racing of animals , automobiles, motorcycles or athletes. A race track may also feature grandstands or concourses. Some motorsport tracks are called speedways.A racetrack is a permanent facility or building...
extracted, his work was not profitable but taught him valuable lessons about odds, probabilities and pricing.
One of his college internships was with Pfizer
Pfizer
Pfizer, Inc. is an American multinational pharmaceutical corporation. The company is based in New York City, New York with its research headquarters in Groton, Connecticut, United States...
, where through the employee stock ownership program he began to focus on the principle that favorable pricing can compensate for volatility.
Professional career
After graduating from college in 1987, Fletcher began his career at Bear Stearns as a quantitative equity traderTrader (finance)
A trader is someone in finance who buys and sells financial instruments such as stocks, bonds, commodities and derivatives. A broker who simply fills buy or sell orders is not a trader, as they are merely executing instructions given to them. According to the Wall Street Journal in 2004, a managing...
who capitalized on dividend
Dividend
Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business , or it can be distributed to...
-related arbitrage in the options
Option (finance)
In finance, an option is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the...
department. He was recruited to Kidder Peabody as a trader in the equity trading group. After his tenure at Kidder Peabody he founded Fletcher Asset Management. Fletcher Asset Management makes supportive investments in mid-sized public companies. After Fletcher’s 2010 investment in a regional bank and purchase of many of the bank’s troubled assets, experts noted that the deal was unusual and potentially groundbreaking because Fletcher invested in the bank by buying shares, essentially becoming a part owner.
Fletcher Asset Management
When Fletcher started Fletcher Asset Management (FAM), he was identified by FortuneFortune (magazine)
Fortune is a global business magazine published by Time Inc. Founded by Henry Luce in 1930, the publishing business, consisting of Time, Life, Fortune, and Sports Illustrated, grew to become Time Warner. In turn, AOL grew as it acquired Time Warner in 2000 when Time Warner was the world's largest...
in 1994 as the top earning member of their thirty talented individuals under the age of thirty. During the firm's first four years, it traded with heavy leverage
Leverage (finance)
In finance, leverage is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives. Important examples are:* A public corporation may leverage its equity by borrowing money...
. When he founded his firm as chairman and CEO, he located it on the 48th floor of the General Motors Building
General Motors Building (New York)
The General Motors Building is a 50-story, 705-foot office tower in Manhattan, New York City, facing Fifth Avenue at 59th Street . The building is one of the few structures in Manhattan that occupies a full city block...
on Fifth Avenue. Fletcher had audited returns of 471% in 1992 and 177% in 1993, and unaudited returns of 267% in 1994 through August 31. During his first five years in business after founding his firm in 1991, the firm's audited annual returns were 350%. His general strategy was trading public instruments for his own account and on behalf of clients, but he also made longer-term equity investments. He used hedges
Hedge (finance)
A hedge is an investment position intended to offset potential losses that may be incurred by a companion investment.A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of...
with both types of investments. He has also been involved in PIPE deals.
His firm's trading activity at one time occasionally accounted for 5% of the volume on the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
, and former boss and mentor Alan Greenberg
Alan Greenberg
Alan C. "Ace" Greenberg is a former Chairman of the Executive Committee of The Bear Stearns Companies, Inc.He began work at Bear Stearns in 1949 as a clerk. He served as Chairman of the Board of Bear Stearns from 1985 to 2001, and as its CEO from 1978 to 1993. Greenberg serves also as a...
described him in 1998 as a smart winner. In 1994, Fletcher surrendered his broker-dealer
Broker-dealer
A broker-dealer is a term used in United States financial services regulations. It is a natural person, a company or other organization that trades securities for its own account or on behalf of its customers....
registration and became a registered investment adviser, which made managing money more convenient. Although his firm has thrived, he had never dreamed of entrepreneurial enterprise and had hoped to be a GE executive someday.
Alphonse Fletcher vs. Kidder Peabody
At age 25, Fletcher was Kidder Peabody's top equity trader, and he was earning $2 million a year. At the time, Kidder Peabody was owned by General ElectricGeneral Electric
General Electric Company , or GE, is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States...
(GE). As part of his relationship with Kidder Peabody, the company agreed to pay him one quarter of the profits that he made for the company, but when he earned the company $25 million, they only paid him half of the amount promised. He sued for the other half ($3 million in back pay). In addition to the pay dispute, he filed a $5 million (plus punitive damages
Punitive damages
Punitive damages or exemplary damages are damages intended to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit...
) discrimination suit. Fletcher claimed the company had kept their promise to white employees and claimed racial discrimination because white employees were paid more generously for similar work. Alleging a violation of State Human Rights Law, Fletcher filed a discrimination claim in the New York State Courts. The New York Supreme Court, Appellate Division
New York Supreme Court, Appellate Division
The Supreme Court of the State of New York, Appellate Division is the intermediate appellate court in New York State. The Appellate Division is composed of four departments .*The First Department covers the Bronx The Supreme Court of the State of New York, Appellate Division is the intermediate...
ruled that an arbitration panel would hear his case.
Jurisdiction in the case was a hotly contested matter. In the Individual Assignment System (IAS) of the New York Supreme Court
New York Supreme Court
The Supreme Court of the State of New York is the trial-level court of general jurisdiction in thestate court system of New York, United States. There is a supreme court in each of New York State's 62 counties, although some smaller counties share judges with neighboring counties...
, Fletcher sued Kidder Peabody under the New York State Human Rights Law, alleging racial discrimination in employment in violation of Executive Law § 296(1)(a). In response, Kidder Peabody moved to stay the judicial proceedings and compel arbitration on the basis of the broad arbitration clause that Fletcher had signed as part of his securities exchange registration applications. Kidder Peabody contended that the Federal Arbitration Act
Federal Arbitration Act
In United States law, the Federal Arbitration Act is a statute that provides for judicial facilitation of private dispute resolution through arbitration. It applies in both state courts and federal courts, as was held in Southland Corp. v. Keating...
(FAA), which preempts state law, mandated enforcement of Fletcher's promise to submit "controversies ... arising out of [his] employment" to arbitration. The IAS court denied the motion, reasoning that "it would be against public policy to contract in advance for a waiver of the right to obtain judicial redress of alleged racial discrimination." The New York Supreme Court, Appellate Division
New York Supreme Court, Appellate Division
The Supreme Court of the State of New York, Appellate Division is the intermediate appellate court in New York State. The Appellate Division is composed of four departments .*The First Department covers the Bronx The Supreme Court of the State of New York, Appellate Division is the intermediate...
, however, "reversed and granted the requested relief after concluding that the FAA and the cases decided under that statute mandated enforcement of [Kidder Peabody's] arbitration agreement". The United States Supreme Court declined to hear the case. Fletcher eventually won an arbitration award of $1.3 million.
Dakota lawsuit
In February 2011, Fletcher filed a lawsuit in New York Supreme Court against the Board of Directors of the Dakota co-op building in Manhattan where he has lived for more than 20 years.1992, Fletcher purchased a first-floor apartment at the Dakota in New York City. Fletcher was only the second African-American approved to buy an apartment in the century-old building, and the Dakota had previously rejected three other applications of his .,
A year later, Fletcher attempted to purchase another, larger apartment, this one on the Dakota’s fifth floor. As a condition of approving the purchase, the Dakota board required him to immediately sell his first-floor apartment and prohibited him from using the first-floor apartment for any purpose until its sale became final. According to Fletcher, the Dakota board did not impose these restrictions on any other residents, and, consequently, they became known around the building as the “Buddy Rule.”
In 2002, Fletcher sought to buy a two-room, ninth floor apartment at the Dakota for his mother. The board approved the sale, but again imposed a number of conditions on Fletcher, including that he use a trust to buy the apartment and prohibiting anyone other than Fletcher’s mother—including relatives—from staying overnight in the apartment.
In 2010, Fletcher signed a contract to purchase apartment 52 at the Dakota, intending to combine this apartment with his existing fifth-floor apartment. The purchase was to be a $5.7 million all-cash transaction, and Fletcher agreed to prepay over $400,000 in maintenance fees. In connection with his application to purchase the apartment, Fletcher states that he submitted hundreds of pages of documents regarding his own finances and those of Fletcher Asset Management. The Dakota board, however, rejected Fletcher’s application.,
Fletcher then filed a lawsuit in New York State Supreme Court against the Dakota, a number of its directors, and others, alleging that the defendants had defamed him and engaged in unlawful self-dealing, unlawful discrimination, and inappropriate retaliation. His complaint cited other incidents where the Dakota board had allegedly discriminated against other minorities. For example, the complaint cited one board member’s comments that two applicants were part of the “Jewish mafia” and a board member’s suggestion that the Spanish actor Antonio Banderas had applied to purchase a first-floor apartment at the Dakota “so that he could ‘more easily buy drugs on the street.’” The Dakota ultimately rejected the application by Banderas and his wife, actress Melanie Griffith.
The co-op board filed a 237-page response that denied Mr. Fletcher's claims and said he simply lacked the wealth he claimed. According to the New York Times, the response was noteworthy in that it is rare for any co-op board, let alone a famous one, to disclose internal matters.24 Although Mr. Fletcher is a well-known investor, the board, citing tax returns such as his 2009 income of $674,000, bank records and other documents that he submitted when applying to buy the $5.7 million apartment, called his statement of net worth "highly unrealistic." The article also reported defendants’ claim that the money Mr. Fletcher claimed to manage was "greatly inflated" because his firm, Fletcher Asset Management, double-counted its assets, which Mr. Fletcher said was $429 million, according to the court filing. And because the firm reported a cumulative net loss from 2007 to 2009, the Dakota's finance committee called the value that Mr. Fletcher put on his business "not credible." The board also was concerned that Mr. Fletcher supplied information through an accounting firm that appeared to be independent but was actually run by one of his employees. The response questioned whether Mr. Fletcher could afford another apartment when his total annual maintenance cost would rise to $228,873 and renovations would cost $1 million to $2 million. Fletcher had offered cash for the transaction, more specifically, last spring Fletcher entered into a contract for the all-cash purchase of apartment 50, with the apartment's owner, free of any financing contingency.
Fletcher responded to the Board’s claims by stating that the Board had ignored and deliberately misrepresented extensive, independent documentation of his financial strength as well as expert reports calculating his net worth at over $80 million. In a March 2, 2011 affidavit he explained “‘that Fletcher Asset Management is in excellent financial health.’” Among other things, the affidavit noted that Fletcher’s valuation of Fletcher Asset Management was based on well-accepted, standard approaches to valuing asset management companies and that Fletcher Asset Management had continued paying dividends averaging more than $4,500,000 a year during the financial crisis. Furthermore, the affidavit also noted that—although the defendant board members claimed to be financial experts—they appeared to miss the fundamental principle that, for a S Corporation such as Fletcher Asset Management, reported income was not an appropriate measure of the corporation’s overall strength. The affidavit also recounted Fletcher’s unprecedented disclosures to the Dakota board in connection with his application to purchase apartment 50 as well as prior admissions by board members that their concerns about Fletcher’s finances were overwrought.
The case remains pending in New York State court.
Run for public office
Fletcher was among a field of eighteen candidates who submitted résuméRésumé
A résumé is a document used by individuals to present their background and skillsets. Résumés can be used for a variety of reasons but most often to secure new employment. A typical résumé contains a summary of relevant job experience and education...
s to the New York State Legislature in January 2007 for the position of New York State Comptroller, although eventual selection was Thomas DiNapoli
Thomas DiNapoli
Thomas P. DiNapoli is the 54th Comptroller of the state of New York. He is a former state assemblyman in New York, who was appointed as New York State Comptroller on February 7, 2007. He was formerly the Chairman of the Assembly Environmental Conservation Committee. DiNapoli is a Democrat from...
.
The possibility of Mr. Fletcher’s public service caused one lawmaker to say he “will be hard to say no to” and the media took note of the “Harvard-educated, black millionaire philanthropist with plenty of financial experience. Just the sort of financial expert Eliot Spitzer’s people were looking for. Fletcher’s sporadic history of voting and registering to vote, speculated some, “seems to indicate a certain indifference to politics" and it was noted that he had rarely voted in either federal or state elections and had registered previously as both a Republican and an Independent.
Philanthropy
In 1993, following the death of friend and advisor Reginald LewisReginald Lewis
Reginald F. Lewis , was an American businessman, who was one of the most successful business leaders during the 1980s. He was the richest African-American man in the 1980s. Born in Baltimore, Maryland, he grew up in a middle class neighborhood. He won a football scholarship to Virginia State...
, Fletcher donated $1 million to the Reginald F. Lewis Memorial Endowment. The endowment had been created by the National Association for the Advancement of Colored People
National Association for the Advancement of Colored People
The National Association for the Advancement of Colored People, usually abbreviated as NAACP, is an African-American civil rights organization in the United States, formed in 1909. Its mission is "to ensure the political, educational, social, and economic equality of rights of all persons and to...
after Lewis instructed his wife to bequeath $2 million to the organization.
In 1996, to commemorate the 100th anniversary of Plessy v. Ferguson
Plessy v. Ferguson
Plessy v. Ferguson, 163 U.S. 537 , is a landmark United States Supreme Court decision in the jurisprudence of the United States, upholding the constitutionality of state laws requiring racial segregation in private businesses , under the doctrine of "separate but equal".The decision was handed...
, , Fletcher endowed a University professorship at Harvard College with a $4.5 million dollar donation. The Alphonse Fletcher, Jr. chair belongs to a special category of endowed positions established in 1935 as Harvard's highest professorial distinction. The chair was intended to be held, "whenever possible, by a faculty member from one of the professional schools who is devoted to teaching and research about contemporary moral, religious, and social values, and whose interests include undergraduate education." Before leaving for Princeton University
Princeton University
Princeton University is a private research university located in Princeton, New Jersey, United States. The school is one of the eight universities of the Ivy League, and is one of the nine Colonial Colleges founded before the American Revolution....
, Cornel West
Cornel West
Cornel Ronald West is an American philosopher, author, critic, actor, civil rights activist and prominent member of the Democratic Socialists of America....
held this chair. In 2006, Henry Louis Gates, Jr.
Henry Louis Gates, Jr.
Henry Louis “Skip” Gates, Jr., is an American literary critic, educator, scholar, writer, editor, and public intellectual. He was the first African American to receive the Andrew W. Mellon Foundation Fellowship. He has received numerous honorary degrees and awards for his teaching, research, and...
became the Fletcher University Professor.
In 2004, to commemorate the 50th anniversary of Brown v. Board of Education
Brown v. Board of Education
Brown v. Board of Education of Topeka, 347 U.S. 483 , was a landmark decision of the United States Supreme Court that declared state laws establishing separate public schools for black and white students unconstitutional. The decision overturned the Plessy v. Ferguson decision of 1896 which...
, , Fletcher pledged $50 million to create the Fletcher Foundation
Fletcher Foundation
The Fletcher Foundation is a nonprofit foundation that supports civil rights and environmental education. It was created with a $50 million endowment in 2004 by New York financier and philanthropist Alphonse Fletcher, Jr....
to give money to institutions and individuals working to improve race relations. The pledge, if it eventually becomes a donation, would rival prior gifts by Oprah Winfrey
Oprah Winfrey
Oprah Winfrey is an American media proprietor, talk show host, actress, producer and philanthropist. Winfrey is best known for her self-titled, multi-award-winning talk show, which has become the highest-rated program of its kind in history and was nationally syndicated from 1986 to 2011...
and Bill Cosby
Bill Cosby
William Henry "Bill" Cosby, Jr. is an American comedian, actor, author, television producer, educator, musician and activist. A veteran stand-up performer, he got his start at various clubs, then landed a starring role in the 1960s action show, I Spy. He later starred in his own series, the...
as one of the largest ever by an African-American. The fellowships are awarded to individuals who improve race relations in a manner that promotes the broad social goals of the Brown v. Board of Education decision that outlawed segregation
Racial segregation
Racial segregation is the separation of humans into racial groups in daily life. It may apply to activities such as eating in a restaurant, drinking from a water fountain, using a public toilet, attending school, going to the movies, or in the rental or purchase of a home...
in public schools. The $50,000 fellowships are awarded to educators, lawyers, scientists, artists, economists, writers, doctors and others. He has since endowed the Alphonse Fletcher Sr. Fellowship program at Harvard, named after his late father.
In 2006, Fletcher was part of a consortium of individuals who created a $50 million Professorship Challenge Fund at Harvard University. The fund provides matching funds that encourages gifts to endow named professorships and provide faculty support across the University.
Awards
Fletcher earned the 1999 Ernst & YoungErnst & Young
Ernst & Young is one of the largest professional services networks in the world and one of the "Big Four" accountancy firms, along with Deloitte, KPMG and PricewaterhouseCoopers ....
New York City "Entrepreneur of the Year", 2002 Sponsors for Educational Opportunity "Leadership Award", 2004 United Negro College Fund
United Negro College Fund
The United Negro College Fund is an American philanthropic organization that fundraises college tuition money for black students and general scholarship funds for 39 private historically black colleges and universities. The UNCF was incorporated on April 25, 1944 by Frederick D. Patterson , Mary...
"Extraordinary Black Man Award", 2005 Harvard University Gay and Lesbian Caucus "Civil Rights Award", and 2006 Morehouse College
Morehouse College
Morehouse College is a private, all-male, liberal arts, historically black college located in Atlanta, Georgia. Along with Hampden-Sydney College and Wabash College, Morehouse is one of three remaining traditional men's colleges in the United States....
"Candle in the Dark". In explaining why he had been awarded the 2005 Harvard University Gay and Lesbian Caucus award, Tom Parry, president of the HGLC, said that Fletcher had distinguished himself, not just as a philanthropist but as someone who had worked tirelessly to further the causes of equality and racial justice.
Committee Memberships
Fletcher is a member of both the Harvard University New York Major Gifts Committee and the Committee on University Resources. Fletcher is also a member of the Harvard Friends of Engineering and Applied Science. Fletcher serves as a trustee of the Alvin Ailey American Dance TheaterAlvin Ailey American Dance Theater
The Alvin Ailey American Dance Theater is a modern dance company based in New York, New York. It was founded in 1958 by choreographer and dancer Alvin Ailey...
, the New School for Social Research, and the Public Theater/New York Shakespeare Festival
New York Shakespeare Festival
New York Shakespeare Festival is the previous name of the New York City theatrical producing organization now known as the Public Theater. The Festival produced shows at the Delacorte Theater in Central Park, as part of its free Shakespeare in the Park series, at the Public Theatre near Astor Place...
. He has been the United Negro College Fund
United Negro College Fund
The United Negro College Fund is an American philanthropic organization that fundraises college tuition money for black students and general scholarship funds for 39 private historically black colleges and universities. The UNCF was incorporated on April 25, 1944 by Frederick D. Patterson , Mary...
New York campaign chairman.