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SPEECHES & TESTIMONY

  • Speech of Commissioner Sharon Y. Bowen before the Lawyers for Empowerment and the Advancement of Diversity (LEAD), Reed Smith, New York, NY

    February 22, 2017

    Commissioner Bowen’s Background and Career Path

    Thank you for the kind introduction and good evening everyone. It is a pleasure to be with you tonight to talk about diversity and inclusion. Let me first note that the views expressed today are my own, and do not reflect those of the other Commissioners or Commission staff.

    I am honored to join you today and participate in this LEAD Program event. I first would like to congratulate John Mbiti from Credit Suisse for developing the LEAD Program and on winning an Apollo Project award for his work. John recognized that minority associates were at a disadvantage because they did not have extensive personal relationships at corporations and financial institutions. He created the LEAD Program to provide these minority associates with mentors in order to facilitate their relationship development. Using mentor/mentee relationships works, and enriches the experiences of all involved.

    I was a member of the initial working group and the first Board of Directors of the Practicing Attorneys for Law Students (PALS) program back in the early 1980s. PALS provided a mentorship program for black law students attending NY metropolitan law schools to be mentored by black attorneys at law firms. We formed PALS to help increase the pipeline of black law students into major firms. I am pleased to say that PALS is still thriving over 30 years later. When I was at Latham and Watkins, I co-founded and headed Latham’s Women Enriching Business (WEB) Task Force, whose mission, similar to LEAD, was to create broader networks and productive business development relations for women. Just to be clear, diversity in and of itself is a laudable goal, but diversity also makes companies stronger and more profitable. Diversity and inclusion are good business practices.

    This evening, I have the opportunity to share with you my unique prospective. I have had the privilege to serve as a commissioner of the CFTC for two and a half years. I can say now, as I did at the time of my confirmation process that, I will continue to be a voice for those who have not had the chance to be seated at the table. Those who did not have a voice and suffered greatly because of the financial crisis. So it is through that lens that I view one of my primary mandates is to protect the everyday citizen and mitigate the risk of another financial crisis.

    With that backdrop, let me tell you a little about me and my agency.

    Prior to passage of Dodd-Frank in 2010, not many people had heard of the CFTC. So, by way of introduction, let me say that the CFTC was established in 1974 to address manipulation, and other types of fraud, in the commodity futures markets. After the 2008 crisis and the passage of Dodd-Frank the Commission’s oversight was expanded to cover the $400 trillion swaps market.1 Today, the derivatives products we oversee are critically important to the safety and stability of the U.S. economy.

    My own service at the Commission started on June 9, 2014, when I was sworn in as a Commissioner. I am the very first African-American to serve as a Commissioner at the CFTC. Prior to becoming Commissioner, I served as Vice Chair, and later Acting Chair, of the Securities Investor Protection Corporation (SIPC). But before that, the bulk of my career – starting in 1982 – was as a corporate and transactional lawyer on Wall Street. My early career was as an associate at Davis Polk and Wardell, but then I moved to Latham and Watkins in 1988, and became a partner there in 1991. I spent 26 rewarding and enriching years at Latham doing everything from corporate, finance and securities transactions to mergers and acquisitions for many Fortune 500 companies. I thoroughly enjoyed the practice of law as well as building relationships with key individuals in law, business and politics.

    Commissioner Bowen’s Diversity Efforts Before CFTC

    Promoting diversity has always been an important part of my career and worldview. I think that a diverse workforce is not just the right thing to do, but a critical component of meeting the mission of institutions in today’s diverse and dynamic world. Make no mistake about it: having a diverse workplace is mission critical. I personally implemented a number of diversity initiatives at Latham, including a Diversity Weekend event which resulted in higher applications and offer acceptances by diverse candidates, the Latham Diversity Scholars Program, and, as previously mentioned, I co-founded the Women Enriching Business Task Force. I am proud to say that those initiatives still exist and thrive today. I am very proud of what we built when I was there, and the gains made by my successors since I’ve left.

    Diversity at the CFTC

    At the CFTC, I have also promoted diversity as a critical element of the Commission’s success. While there are some bright spots at the CFTC, there is much to do to get to a workforce that is truly reflective of our society today. In regard to percentages, as of last year, among our 718 employees, 44% were women, 17% were African-Americans, 10% were Asian Americans, and 3% were Hispanic-Americans.2 Those figures are similar to the averages for the overall Civilian Labor Force, and have for the most part, improved, but not significantly over the last three years.3

    The diversity breakdown is considerably worse, however, when you look only at management. Last year, our pool of senior level employees was made up of 30% women, 8% African-Americans, 6% Hispanic-Americans and 5% Asian-Americans.4

    Diversity in the Financial Services Industry

    Having spent my entire career working with Wall Street, I also know from first-hand experience that that world of finance still has a long way to go in terms of diversity. As more and more women and minorities have joined the financial services industry, their representation in high-level positions has not kept pace. According to a study by Deloitte and The Alliance for Board Diversity, in 2016, women and minorities occupied about 31% of board seats of Fortune 500 companies, an increase from 26.7% in 2012.5 Overall, 19 black women gained seats on Fortune 500 boards, black men gained five, and white women increased the most out of all groups with 156 new seats.6 Today, diversity is present in many financial institutions, but seldom is it present at all levels of management. I’ve learned that for diversity to effectively create a positive change to a company’s bottom line then it must be present up and down the corporate ladder.

    I also know from experience that diversity on corporate boards and within the corporate chain of command is valuable to investors who often believe that diverse companies perform better. It also seems that these investors are right and that all else being equal diverse companies outperform non-diverse companies.7 To illustrate, an investment criteria focused on S&P 500 companies with above average diversity would have yielded returns in excess of the S&P 500’s over the same time period.8 For me it is clear why this is the case, a more diverse workplace fosters diverse ideas and helps prevent groupthink. A diverse company is also better able to anticipate and understand its client base because it has the capability to relate to a wide spectrum of circumstances and experiences.

    Advice About How to Shape Goals for Diversity Efforts

    So my past experiences and my experience at the Commission have taught me that in order to build a successful diversity program there are four factors that must be in place: (1) a clear articulation of the importance of diversity to the mission of the organization; (2) clearly defined goals on what the diversity program should achieve; (3) buy-in from all the relevant stakeholders, including those who are not necessarily from the “diverse” population; and (4) an environment that lends itself to inclusion.

    First, if you intend to establish, or expand, a diversity program in your office, you need to make the business case to the organization, particularly management, for diversity. You need to make it clear that diversity impacts the bottom line. When I was at Latham, there were executives of client companies that demanded that people of color and women were included on teams. So it was in Latham’s best interest as a firm to support increased diversity at all levels of the organization. Management, and other stakeholders, would be much more likely to support diversity efforts if they see them as actually improving the bottom line; you need to make that case.

    Second, you have to crawl before you can walk. It is important that you set milestones for your diversity efforts – what you would like to see in the first three months, by the first year, etc. Set ambitious, but realistic goals so that you can effectively grow your program.

    Third, you need to get buy-in from all relevant stakeholders for the diversity initiative. When you make that business case, you need to make it to many and make it often so that you gain broad-based support for your efforts. Diversity is not just an issue for “diverse” members of your staff, but for the whole organization.

    And last, you need to foster an environment that lends itself to inclusion. My staff will tell you that I like to hear their diverse viewpoints. I don’t think that hearing different views, even when they clash, is a bad thing, but rather a good thing. A work environment where everyone is invited into the conversation, and encouraged to raise their views, even if opposing, produces a healthier dialogue, and a better product.

    In sum, diversity is an essential part of the modern American workplace. I have always believed that, and I believe it even more strongly now. I encourage you to establish, or grow, the diversity initiatives at your firms through clear vision, defined goals, broad-based buy-in and an inclusive environment. Thank you for your attention and I look forward to answering any questions you may have.

    1 See “Mission & Responsibilities,” available at http://www.cftc.gov/About/MissionResponsibilities/index.htm.

    2 “No Fear Act,” available at http://www.cftc.gov/WebPolicy/EEONoFearAct/index.htm.

    3 Some CFTC percentages are higher than the average (African-Americans and Asian Americans), and some fall below the average (women and Hispanics).

    4 Id.

    5 Madeline Farber, Board Diversity at Fortune 500 Companies Has Reached an All-Time High, Fortune, available at http://fortune.com/2017/02/06/board-diversity-fortune-500.

    6 Id.

    7 See, e.g., Credit Suisse Research Institute, Gender Diversity and Corporate Performance 6 (2012), available at http://www.calstrs.com/sites/main/files/file-attachments/csri_gender_diversity_and_corporate_performance.pdf, (“Our key finding is that, in a like-for-like comparison, companies with at least one woman on the board would have outperformed in terms of share price performance, those with no women on the board…”); McKinsey & Company, Women Matter: Women at the Top of Corporations: Making it Happen 7 (2010), available at http://www.mckinsey.com/~/media/mckinsey%20offices/france/pdfs/women_matter_2010.ashx.

    8 Constantin Cosereanu, A Gender-Focused Strategy Beat the S&P 500 by 141 Percent, Bloomberg News, available at https://www.bloomberg.com/news/articles/2016-06-16/a-gender-focused-strategy-beat-the-s-p-500-by-141-percent.

    Last Updated: February 24, 2017