Wall Street Women Take Suit to Court

Morgan Stanley Case Could Set Precedents

NEW YORK -- The 340 women who held top positions in Morgan Stanley's institutional equities division include some of Wall Street's highest flyers. Some made millions of dollars a year as executives, saleswomen and administrators.

But the Equal Employment Opportunity Commission goes to court Wednesday to contend that as a class, they were paid less and promoted less often than their male counterparts. And as part of their efforts to prove "a pattern and practice" of discrimination, EEOC lawyers plan to introduce evidence of lewd behavior and sexist comments that could provide a new black eye for an industry struggling to regain investor trust after allegations of biased research and predatory mutual fund trading.

Such allegations have been heard before. Wall Street has been home to numerous sex discrimination and harassment claims in recent years, and both Salomon Smith Barney -- now part of Citigroup Inc. -- and Merrill Lynch & Co. have paid millions of dollars to settle class-action sex discrimination cases.

But two things make Wednesday's court date unusual -- the high rank of the women involved and Morgan Stanley's decision to fight back. Employment lawyers and EEOC officials cannot remember another Wall Street case of this size that went to trial.

"Women on Wall Street, the higher up they are, the more reluctant they are to complain," said Pearl Zuchlewski, an employment lawyer who represents securities industry professionals. "What's extraordinary about this case is the level of women and the amounts of compensation. . . . The EEOC is doing a very noteworthy litigation."

Morgan Stanley officials say the firm has done nothing wrong. "We are confident the evidence will show that Morgan Stanley does not discriminate in matters of pay, promotions and conditions of employment," said Melissa Stonberg, a spokeswoman.

According to the firm's Web site, 48 percent of U.S. employees are female, as are 35 percent of "officials and managers." A survey by the Securities Industry Association found that 37 percent of industry employees and 19 percent of managing directors (the rank at issue in the EEOC case) are women.

Thousands of employees file discrimination charges with the EEOC each year, but the agency does extensive research and is quite selective about the cases it chooses to bring directly. In 2003, the EEOC received 81,293 charges of discrimination but filed only 393 lawsuits. EEOC's biggest victory on the sex-discrimination front was a 1998 settlement with Mitsubishi Motor Manufacturing of America Inc., which agreed to pay $34 million to settle a sexual harassment case at its Normal, Ill., assembly plant in 1998. The settlement also included the creation of a three-person monitoring panel. The EEOC also reached $10 million settlements with Ford Motor Co. (1999) and Dial Corp. (2003).

But some of the highest-profile discrimination cases come to court without the help of the EEOC. These lawsuits are filed directly by individual employees who then must convince a judge to certify that their claims are representative of a larger class. Such a class-action lawsuit led Home Depot Inc. to pay $104 million in 1997 to settle sex-discrimination claims.

That route got an enormous boost last month when a federal judge in San Francisco allowed a sex-discrimination suit against Wal-Mart Stores Inc., involving 1.6 million current and former employees, to proceed. Wal-Mart is appealing the certification of the women as a class.