Merrill Lynch poised to settle race bias claim in $160m deal
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Thursday 29 August 2013
A racial discrimination suit against Merrill Lynch that has been slowly winding its way through American courts is close to being resolved, with the biggest settlement of its kind said to be in the works after an eight-year legal tussle.
George McReynolds, an African-American broker, filed the case in 2005 when the firm was headed by Stan O'Neal, Merrill's first African-American chief executive.
Mr McReynolds accused the Wall Street firm of treating its African-American brokers unequally, something that he claimed stunted their career prospects.
Since 2005, hundreds of other brokers have added their names to the case. Mr McReynolds' lawyer, Linda Friedman, a veteran of discrimination cases, eventually convinced the courts that the case should be classified as a class-action lawsuit, and a trial date was set for early next year.
But now, a preliminary deal has been reached under which Merrill, which was bought by Bank of America during the financial crisis, would pay $160m (£103m) to the brokers, according to the New York Times.
If confirmed, the payout to the plaintiffs would be the largest-ever in a racial discrimination case against an American employer.
Bill Halldin, a spokesman for Bank of America, declined to comment on whether the two sides had reached a preliminary settlement.
"We are working toward a very positive resolution of a lawsuit filed in 2005 and enhancing opportunities for African-American financial advisers," he said.
Ms Friedman did not immediately respond to a request for comment.
In 2006, Mr O'Neal made headlines when he was deposed in the case, admitting that attrition rates for African-American brokers at the firm were higher while their pay was lower, though he added that Merrill was not at fault for discrepancies.
Mr O'Neal left the company in late 2007 after Merrill disclosed billions of dollars in losses connected to toxic mortgage securities.
According to Mr McReynolds's complaint, when he filed the case in 2005, African-American brokers were employed at only 87 of the company's 639 offices.
"It's been a long journey," Mr McReynolds, who still works for the firm, told the New York Times. "There were a number of years where we didn't know where it was going... [But] I never gave up. As long as it was alive, I thought we had a chance."
Explaining his motivation to bring a case against his employer, he cited the way his children responded to the suggestion that they should work for Merrill.
"They basically said, 'Dad, I couldn't put up with what you have to put up with,'" he said.
"I hoped they would be able to come on with me as a team and carry on what I'd been doing. But they could see things."
Decades before Mr McReynolds went to court, Merrill was sued by the Equality Opportunity Employment Commission in the 1970s, a case that eventually resulted in a consent decree under which the firm agreed to hire greater numbers of African-American brokers.
Then, in 1998, came a sex-discrimination class-action lawsuit. Merrill resolved those claims by settling with the hundreds of women involved in the action.
Suzanne Bish, a lawyer at Ms Friedman's firm of Stowell & Friedman, said that the case brought by Mr McReynolds and other African-American brokers would help future generations of Wall Street employees.
"Their goal in filing this was to try to make Wall Street a friendlier place where their kids would have the same opportunities to do this job that they love so much," she told Bloomberg. "Our clients are going to help Merrill and help Wall Street be a more open place for everyone."
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