The commission, according to the Times, has been investigating the treatment of women working in Morgan Stanley's investment bank for two years.
It all began when Allison K. Schieffelin, a former convertible bond sales representative, complained that she had been underpaid, excluded from outings with clients and denied a promotion because of her sex.
Last week, the commission told the firm's lawyers that they had until today to settle the matter or risk being sued immediately, one Morgan Stanley executive told the newspaper.
If filed, the suit would be a rare case of the federal government's taking up the cause of a wealthy professional in a workplace dispute with a major financial services firm.
Traditionally, such disputes are resolved in industry-sponsored arbitration. The most notable recent exceptions were class- action complaints filed in federal court and later settled by women stockbrokers against Merrill Lynch & Company and the Smith Barney unit of Citigroup.
The commission would sue Morgan Stanley on behalf of not only Schieffelin, who was fired in October from a job that had paid her more than $1 million annually, but also any other women it might identify as having been in a similar situation, the Morgan Stanley executive told the Times.
After Morgan Stanley fired Schieffelin, the commission added a retaliation charge to her complaint against the firm.
Morgan Stanley's lawyers have negotiated with the commission for several months but have refused to acknowledge that Schieffelin was a victim of discrimination, according to the Times.
Company officials have said that Schieffelin was one of the highest- paid employees in her department, and that she lost out on a promotion to managing director to another woman, Gay Ebers. It was a dispute with Ebers, then her supervisor, that led to Schieffelin's dismissal, company officials have said.
Reading a statement, a Morgan Stanley spokesman said yesterday, "Mutual respect and nondiscrimination are core values here and if we have to go to court to prove it, then we will."
The commission, which is charged with enforcing the nation's laws against discrimination in the workplace, had, as part of its investigation into Schieffelin's complaint, contacted women who had worked at the firm. The commission gathered troves of files from Morgan Stanley that documented the firm's hiring and promotion practices in its institutional equities division, where she worked.
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cutives at Morgan Stanley Dean Witter tell The New York Times that they expect the federal Equal Employment Opportunity Commission to file a sex discrimination suit against the firm as soon as this week.