Merrill Lynch will pay $160 million to 1,200 black brokers who have worked for the Wall Street giant since 2001.
A black broker filed the original lawsuit. He alleged the firm provided greater sales opportunities to white brokers than blacks. He said the discrimination was compounded when lucrative client accounts were awarded based on previous production. The plaintiffs’ attorneys alleged that Merrill Lynch (now owned by Bank of America) engaged in “systemic” discrimination.
At the time the original suit was filed, about one out of 75 Merrill Lynch brokers were black.
The case worked its way through the federal court system for eight years—including two trips to the U.S. Supreme Court—before the parties agreed to settle it. As part of the settlement, Merrill Lynch will consult with the black brokers as it seeks ways to provide a more equitable workplace.
The settlement is the largest discrimination settlement agreed to by a Wall Street firm. In 2008, Morgan Stanley settled similar claims with black and Hispanic brokers for $16 million.
Note: Any bonus or promotion scheme that favors long-tenured employees over newcomers risks having a disparate impact on minorities.