Wall Street Sex-Bias Case Settled
Morgan Stanley Agrees To Pay $54 Million
By Brooke A. Masters
Washington Post Staff Writer
Tuesday, July 13, 2004; Page E01
NEW YORK, June 12 -- Morgan Stanley agreed Monday to pay $54 million to settle the U.S. Equal Employment Opportunity Commission's claim that the Wall Street giant systematically underpaid and failed to promote women.
The eleventh-hour deal, which came after a jury already had been picked, calls for Morgan Stanley to pay $12 million to Allison Schieffelin, the Wall Street trader whose 1998 complaint sparked the case. The firm also has set aside $40 million to pay claims from any of the estimated 340 mid- and upper-level women who are also covered by the settlement who can demonstrate that they were discriminated against.
Morgan Stanley continues to deny that it practiced discrimination, but the firm also agreed to pay $2 million to improve diversity training and to create other internal programs designed to prevent and address discrimination, according to the 19-page settlement document.
"The consent decree is a watershed in safeguarding and protecting the rights of women on Wall Street," said U.S. District Judge Richard M. Berman as he approved the deal. "It focuses . . . on furthering a culture of respect for women at Morgan Stanley."
The settlement prevented a trial that would have spotlighted Wall Street's continuing difficulties with integrating women into a sometimes crude and overwhelmingly male environment. Up to 20 current and former Morgan Stanley employees were expected to testify about how they were denied raises and promotions and exposed to sexist behavior, including all-male outings to strip clubs, hostile comments and a cake shaped like a breast.
The case differs in several key respects from two earlier multimillion-dollar settlements with Wall Street firms: Smith Barney -- now part of Citigroup Inc. -- and Merrill Lynch & Co Inc. The Smith Barney case focused on claims of sexist behavior -- known in the law as a "hostile work environment" -- rather than on claims of discrimination in pay and promotion. Both earlier cases were private, class-action lawsuits without the backing of federal regulators. The two together have paid more than $100 million to resolve complaints through mediation.
The Morgan Stanley case also involved much higher-level women. The women included in the EEOC's case were all in the four top-ranking job categories in the department that oversees trading for large clients such as mutual funds. Some of the plaintiffs made millions a year.
"We hope this sends a message to other employers on Wall Street to take discrimination complaints very seriously," said Elizabeth Grossman, the EEOC supervising trial attorney in charge of the case. "Discrimination is very much a problem on Wall Street."
Morgan Stanley's lead trial attorney Emily Nicklin said the firm settled after a weekend of feverish negotiations because "people make judgments about what is useful for society and themselves."
"We expect this is going to result in a balanced and fair claims process," Nicklin said. "Diversity can always be enhanced."
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