Wall Street litigation leads to important workplace reforms September 9, 2013
Bank of America agreed on Friday to pay $39 million to women who worked in its Merrill Lynch brokerage operation, another costly settlement of a discrimination case filed by its employees.
The agreement, filed Friday evening in a federal court in Brooklyn, was the second by the nation’s largest bank over 10 days. Last week, Merrill Lynch told a federal judge in Chicago that it would pay $160 million to settle an eight-year-old racial discrimination suit filed on behalf of 700 black brokers.
With the new agreement, Merrill will have paid out nearly half a billion dollars to settle employee discrimination claims over the last 15 years.
The case settled on Friday was originally brought by women who had worked in the brokerage division of Bank of America, but it was amended to include women who were brokers at Merrill Lynch after the bank bought Merrill. The money is expected to be divided among as many as 4,800 current and former employees of the two brokerage operations.
Merrill, which has about 15,000 brokers worldwide, also agreed to change its policies to give women a better chance of succeeding. The firm will bring in an applied organizational psychologist to study some of its policies, particularly how teams of brokers are formed and how they share customers’ accounts. A Merrill spokesman said in a statement that the settlement “includes a number of additional and enhanced initiatives that will enrich our existing diversity, inclusion and development programs, providing even more opportunities for women to succeed as financial advisers.”
Merrill has a long history of litigation over its treatment of women and minority employees. In the 1970s, the firm settled a discrimination suit by consenting to make its work force more diverse but never met that goal.
Two decades later, Merrill settled another class-action suit brought by women who worked at the firm and led by a plaintiff named Marybeth Cremin. Merrill settled that suit, known as the Cremin case, in 1998 by agreeing to a process for settling disputes with more than 900 women who filed claims. Otherwise, each of the women would have had to take her claim to industry-sponsored arbitration — a standard agreement in employment contracts on Wall Street.
Merrill ended up paying about $250 million to settle the claims in the Cremin case. It also agreed to make changes to give female brokers a better chance of succeeding in the male-dominated brokerage business.
Less than 10 years later, three women who worked in Bank of America’s brokerage business contended that they faced the same sorts of obstacles that Ms. Cremin had cited at Merrill. They first took their complaints to the federal Equal Employment Opportunity Commission in 2007.
In 2010, they sued Bank of America for practices at both the bank and Merrill Lynch. Judy Calibuso, one of the lead plaintiffs, was a longtime broker for the bank and now works for Merrill Lynch. Another lead plaintiff, Julie Moss, said that “this settlement will advance our efforts to foster diversity and professional success within the work force.”
“Speaking generally of the industry, there have been changes that have attempted to address the gender disparity that exists, but it hasn’t solved the problem,” Plaintiff’s counsel said. “It’s still a well-known secret that women make less than men on Wall Street, and that’s true in the financial advisory world. We think the settlement is a great settlement that increases opportunities for women at Merrill Lynch going forward as financial advisers.”
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