The Wall Street investment house Morgan Stanley agreed Monday to a whopping
$54 million settlement of a sex discrimination lawsuit brought against it by
the U.S. Equal Employment Opportunity Commission (EEOC) on behalf of female
employees who believed they had been illegally passed over for pay raises and
promotion in the firm's Institutional Equity Division.
Morgan Stanley agreed to the settlement just as opening arguments were set
to begin in what would have been the first trial in which a major Wall Street
brokerage defended itself against sex discrimination claims. Instead, the firm
agreed to a settlement that ranks among the largest ever negotiated by the EEOC.
It also marks the first time that the terms of a sexual harassment settlement
against a Wall Street brokerage have become public.
While the settlement applies only to Morgan Stanley, EEOC lawyer Elizabeth
Grossman said the agency hopes it "sends a message to other firms on Wall
Street to take claims seriously," the Long Island-based newspaper Newsday
Critics have long complained that sexual discrimination pervades Wall Street
culture, according to Newsday, which notes that fewer than one in five top-level
managing director jobs are held by women.
The lead plaintiff in the case was Allison Schieffelin, a former Morgan Stanley
broker who in 1998 filed a complaint with the EEOC alleging pay and promotion
disparities. She also claimed that male brokers held key client meetings in
strip clubs and barred their female colleagues from the venues, Newsday reports.
Schieffelin's attorney, Wayne Outten, said she is expected to receive $12 million
for wrongful termination under the settlement.
The EEOC said another $40 million will go into a fund for other female employees
of the IED--past and present--who believe they were discriminated against
at any time since January 1, 1995.
Any money leftover in the fund will be used for scholarship programs for female
students pursuing careers in the financial services industry.
Under the agreement, Morgan Stanley neither admits nor denies guilt. In a statement
issued through the EEOC, the firm maintained that it has, at all times, treated
its women employees fairly and equitably. Still, the settlement requires Morgan
Stanley to provide at least $2 million for diversity programs designed to enhance
the compensation and promotional opportunities for female employees.
"We are proud of our commitment to diversity, and would like to thank
the EEOC staff for working with us to conclude this matter in such a positive
way," Chairman and CEP Philip J. Purcell said. "We look forward to
working with the EEOC in accomplishing our common goals."
Morgan Stanley has agreed to appoint an internal ombudperson and an outside
monitor; implement management training on the federal anti-discrimination laws;
perform promotion and compensation analyses; maintain a complaint data base;
and implement programs to address the promotion and retention of women.
Newsday reports that after a year of failed settlement talks, the agreement
came together over the weekend, after the seating on Friday of a mostly female
jury for the trial.