Wall St. Firm Will
Settle Sex Bias Suit
By JENNY ANDERSON.
NYTimes on the Web, April 25, 2007
For years, sex discrimination
lawsuits against Wall Street firms were almost guaranteed to include details of
crude antics, pornography and strip clubs.
A bias settlement announced yesterday had no such lurid accusations, but sought
to tackle a subtler, if arguably systemic, form of discrimination that has long
troubled Wall Street.
Morgan Stanley agreed to pay at least $46 million to settle a class-action suit
filed by eight current and former female brokers who contended that they were
discriminated against in how they were trained, promoted and paid.
The settlement is intended to overhaul the way accounts are distributed in the
firm’s retail branches — a practice that determined, the women said, their
opportunities for pay and advancement. The distribution system, they
argued, favored the men who had long dominated the brokerage business.
“It kind of institutionalizes historical bias from the freewheeling wild west
days,” said Cyrus Mehri, one of the lawyers who represented the eight plaintiffs
named in the suit and the class of 2,700 women.
Under the settlement, Morgan Stanley agreed to make changes in the way new
accounts are distributed among brokers. As a result, pay for its 2,700
female brokers will increase at least $16 million, according to an estimate in
the settlement.
The case is Morgan Stanley’s second major sex discrimination lawsuit in the last
three years. On the eve of trial in 2004, Morgan Stanley agreed to pay $54
million to settle accusations that it denied women equal pay and promotions in
its investment bank. That case was brought by Allison K. Schieffelin, a
former bond saleswoman.
Wall Street has struggled in recent years to overcome its reputation for
workplaces dominated by white males. This case underlined in particular a
“power ranking” system that dictated how the accounts of retiring and departing
brokers were distributed, as well as new accounts generated from cold calls or
walk-ins. The system measures the revenue that brokers produce and rewards
those with the highest figures.
But such a system favored those who reaped the benefits from branch managers’
handing out new accounts to friends and golf buddies. By gaining the
largest accounts, they generated the most revenue and won the majority of new
ones.
The new system will automate the distribution of accounts, and the methodology
for distributing accounts will be explained to the brokers in writing, according
to the settlement. The data will be made available to those who believe
that they are being discriminated against.
The settlement, Mr. Mehri said, “is a tremendous first step in terms of changing
the practice on Wall Street with regard to how female financial brokers are
treated.”
It followed two years of negotiations.
Caroline Gundeck, head of Morgan Stanley’s global wealth management office of
diversity, said: “We are firmly committed to the initiatives we will be
undertaking to attract and retain women financial advisers and help them be as
successful as possible, and pleased to resolve a legal matter stemming from the
past. Our goal — across the organization — is to be the employer of choice
for talented women.”
The settlement estimates that Morgan Stanley will pay about $7.5 million to put
into effect a number of changes, including the hiring of two industrial
psychologists and an independent monitor to evaluate how the settlement is
applied. The psychologists are charged with the task of understanding
complex issues, like how partnerships are formed among brokers and how women can
secure more accounts from departing brokers.
The plaintiffs named in the suit were Joanne Augst-Johnson, Nancy Reeves, Debra
K. Shaw, Jan Tyler, Cheryl Giustiniano, Laurie Blackburn, Erna Tarantino and
Elizabeth Reinke. Mr. Mehri said that none of the women would be available
for comment.
The settlement applies to all women who were employed as financial advisers or
registered financial adviser trainees in Morgan Stanley’s wealth management
division at any time from Aug. 5, 2003, to the day it is approved. Mr.
Mehri estimated the class at 2,700.
Morgan Stanley employs 8,000 brokers in 400 branches in the United States.
The settlement is subject to the approval of the United States District Court
for the District of Columbia.
Discrimination issues continue to dog Wall Street. Merrill Lynch, after
paying more than $200 million to settle a class-action suit brought in 1997,
faces another suit by black brokers.
(Emphasis Added)
|
