Eight years after a group of black financial advisers filed a lawsuit alleging their bosses systematically steered the most profitable business to white employees, Merrill Lynch is preparing to pay the largest racial discrimination settlement ever.
In addition to distributing $160 million among all black investment brokers and trainees who worked at the firm from mid-2001 to the present, the proposed settlement would create a council of black employees within the company to advise executives on how to improve the firm’s internal culture around race. Merrill Lynch spokespeople have not confirmed the proposal, which a lawyer for the plaintiffs shared with the New York Times on Tuesday, but did say the company is “working toward a very positive resolution of a lawsuit filed in 2005.”
The suit accused the company of “steering black brokers away from the most lucrative business,” thereby shrinking black employees’ share of commission-based pay such that white workers made 43 percent more on average in 2006. The lawyer who shared the settlement with the times estimates as many as 1,200 people will share in the payout. Yet when the suit was filed, black traders made up so little of the firm’s staff that Merrill branches in more than half of U.S. states didn’t have a single black broker.
The firm’s troubled history around discrimination dates back decades, including a 1970s settlement over internal bias that was supposed to create a more diverse workforce. It “never met that goal,” according to the Times. It settled a gender discrimination lawsuit in 1998 after nearly a thousand women filed claims. And this summer, an ongoing lawsuit lead to the disclosure that a company training course recommends that women read a book called “Seducing the Boys Club: Uncensored Tactics From a Woman at the Top.”
Merrill’s specific history aside, the financial world as a whole is an inhospitable place for women and minorities. Both groups remain hugely underrepresented in management positions within the industry, with minorities holding just one in ten management positions. The 2010 Dodd-Frank Wall Street Reform law included new requirements for both racial and gender diversity at private financial firms and government regulatory offices. Like many Dodd-Frank regulations, however, implementation has been slow. Rep. Maxine Waters (D-CA), who is the top Democrat on the House Financial Services Committee, has called on regulators and Wall Street alike to speed up their diversity efforts.