Morgan Stanley Settles Sex-Discrimination Suit
By COLLEEN DEBAISE, DOW JONES NEWS WIRES from the Web, July 12, 2004
NEW YORK -- Morgan Stanley settled a landmark sex-discrimination suit brought by the Equal Employment Opportunity Commission for $54 million on the day it was set to go to trial.
"We hope this sends a message to other employers on Wall Street to take discrimination seriously," said EEOC attorney Elizabeth Grossman at a proceeding in Manhattan federal court announcing the settlement.
The EEOC had accused the firm in September 2001 of discriminating against hundreds of female employees in its institutional-equities division by denying them promotions and raises.
The EEOC's lawsuit also claimed Morgan Stanley tolerated groping, lewd comments and male-only outings with clients to strip clubs and golf courses.
The case was sparked by allegations from former saleswoman Allison Schieffelin, who says she was fired in 2000 for complaining.
Ms. Schieffelin will receive $12 million of the total to settle her claims.
Morgan Stanley didn't admit wrongdoing in settling the case, though it agreed to set up programs to increase women's visibility at the firm as part of the settlement.
On Friday, a jury of eight women and four men had been selected to hear the case, which would have represented the EEOC's first courtroom showdown against a Wall Street firm over alleged sex discrimination.
Previous settlement talks collapsed in December.
The trial had been expected to last three weeks and feature testimony from as many as 28 current and former employees who, the commission says, represented the experiences of 340 women who have worked in the institutional-equities division since 1995.
Morgan Stanley is only the latest Wall Street firm to be under fire for sex discrimination.
In April, a court-ordered panel awarded $2.2 million to a former broker at a Merrill Lynch & Co. office in San Antonio, backing her claims that the securities firm had engaged in a "practice and pattern of gender discrimination."
Nearly a decade earlier in 1996, a group of Garden City, N.Y., female employees from Smith Barney shocked Wall Street with claims of discrimination and sexual harassment, leading to a class-action settlement in 1998.
The case has carried the nickname "Boom Boom Room" because the Garden City branch had a basement called the Boom Boom Room where the harassment took place.
As part of a settlement in that case, Smith Barney's parent, Citigroup Inc., has paid out about $100 million.
Write to Colleen DeBaise at
colleen.debaise@dowjones.com
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