CHICAGO – Lawyers for hundreds of black financial advisers have reached a $160 million settlement in a lawsuit accusing Wall Street brokerage giant Merrill Lynch of racial discrimination, a plaintiffs' attorney said Wednesday.
If approved by a federal judge in Chicago, the payout by Merrill Lynch to around 1,200 plaintiffs would be one of the largest ever in a racial discrimination case, Chicago-based attorney Suzanne E. Bish said.
Bank of America-owned Merrill Lynch — one of the world's largest brokerages with more than 15,000 financial advisers — issued a statement Wednesday saying only, "We're not at this point commenting on the existence of the settlement nor the status of a settlement."
Lead plaintiff George McReynolds accused Merrill Lynch of steering black brokers away from the most lucrative business and so, under a compensation system emphasizing production, they earned less than their white counterparts. They made 43 percent less in compensation on average in 2006, plaintiff filings allege.
The settlement coincides with the 50th anniversary of Martin Luther King Jr.'s "I Have a Dream Speech," Bish noted. She said she hopes the case will help ensure the kind of equal opportunity King spoke about in Washington, D.C.
"I'm getting goose bumps thinking about it," she said about the coincidence the settlement came around the anniversary. "What (the plaintiffs) wanted to achieve was the same opportunities for the next generation — for their children."
Bish said the settlement should force changes beyond the company singled out as the defendant in the eight-year-old lawsuit.
"They are leaders on Wall Street," she said. "And increasing opportunities for African-Americans at Merrill Lynch should spill over to the rest of Wall Street."
The president of the Washington, D.C.-based National Black Chamber of Commerce, Harry C. Alford, echoed that.
"I am elated, ecstatic," he said about the settlement. "It should send a message to Wall Street: You need to be conscious of discrimination and make sure you don't discriminate."
In its own filings in the case over recent years, Merrill Lynch denied the discrimination allegation and staunchly defended its compensation programs.
"All (financial advisers), regardless of race, are judged by the same metric," one of the company's filings argued. "The rule is simple: produce more, earn more."
Settlements don't necessarily imply that a defendant accepts any wrongdoing. Bish said she could not discuss detailed terms of the agreement with Merrill Lynch.
But plaintiffs claimed discrimination pervaded Merrill Lynch, at least partly because the company employed relatively few African-Americans overall. In a 2009 plaintiffs' filing, they contended that fewer than 2 percent of the brokers at Merrill Lynch were black.
"Far from being a colorblind meritocracy, race permeates policy and practice in a way that creates substantial obstacles to equal employment opportunity for Merrill Lynch's African-American employees," William T. Bielby, a professor of sociology, said in the filing.
Merrill Lynch sometimes relied on stereotypes, the filing also asserted, once allegedly suggesting managers encourage black brokers to "learn to play golf or other activities designed to learn how business gets done in manners (they) might not be familiar with."
McReynolds, of Nashville, Tenn., began working for Merrill Lynch in 1983 and continues to work for the firm. In his complaint alleging discrimination, he said his managers once took his office away his office after 20 years on the job and moved him to noisy, heavily trafficked cubical by a women's restroom.
When attorneys filed the lawsuit 2005, McReynolds was the lone plaintiff, though hundreds of others signed on as the suit wound its way through the court, at times appearing as if it might be doomed.
Robert Gettleman, the U.S. district judge overseeing the case in Chicago, had denied the suit class-action status. But the Court of Appeals for the Seventh Circuit in Chicago granted the status in 2012 — reviving the case and vastly extending its reach.
Gettleman must formally approve the deal, a process that could take months. A status hearing in the case is scheduled for Sept. 3.