Investment banks make huge discrimination payouts

Jul 13 2004 by Brian Amble Print This Article

Investment bank Morgan Stanley has agreed a last-minute settlement of $54 million (£29 million) to settle a sex discrimination case in New York involving hundreds of its employees.

The settlement includes a $12million (£6.5 million) award to bond dealer Allison Schieffelin who claimed that she was denied promotion and later fired.

As many as 340 other women also stand to benefit from the ruling if they are able to prove to a hearing judge that they suffered discrimination.

The case was the first to be brought by the Equal Employment Opportunity Commission (EEOC) to reach trial and centred on claims that the bank had a "pattern or practice" of discrimination against women.

The EEOC claimed Morgan Stanley paid less to women in the institutional equity division, denied them job opportunities, and excluded them from client functions at golf games and strip clubs.

If the case had reached court, it planned to call evidence from some 20 women who claimed they were bias victims. This was expected to include salacious details about trips to strip clubs and allegations of widespread sexual harassment

As part of the agreement, Morgan Stanley admitted no wrongdoing and continues to deny that it discriminated against women.

But the success of the action is expected to spur other women to complain about discrimination on Wall Street.

Elizabeth Grossman, the EEOCís lead trial lawyer, said that "discrimination is very much a problem" in the securities industry today. "I expect that we will hear more from women on Wall Street and from racial minorities on Wall Street.Ē

Meanwhile in London, rival bank Merril Lynch has paid £1 million to a former

lawyer in its legal department, Elizabeth Weston, to drop her employment tribunal action against the firm

Mrs Weston brought an action for sexual harassment, constructive dismissal and victimisation after a senior lawyer at the firm made remarks about her breasts and sex life at the office Christmas party.

After complaining about his behavious, she claimed that she was isolated and cold shouldered by workmates after her complaint, and was refused permission to move offices despite repeated requests.

Merrill Lynch settled the case without admitting liability and with the condition that Mrs Weston says nothing publicly about the case.

According to an employment law expert quoted in the Evening Standard: "It would appear that the bank was not looking so much at the amount of compensation she actually deserved, but at how much it would take to buy her silence and avoid days of damaging headlines in the newspapers."

But the bank is still contesting a separate £7.5 million sex discrimination claim by Stephanie Villalba, former head of its European private banking unit. Villalba is claiming that the she was underpaid and then sacked her after being branded "high maintenance".