Merrill Lynch, the behemoth brokerage firm, has agreed to fork over $160 million to settle a racial bias lawsuit brought by a longtime broker who accused the company of providing better opportunities, as well as more compensation, for white employees.
The settlement was confirmed to MSNBC.com by Suzanne Bish, a lawyer with Stowell & Friedman, for the plaintiffs.
The lawsuit was first filed in 2005 on behalf of George McReynolds, but the case grew to include more than 1,200 brokers, said Bish.
McReynolds, 68, who lives in Nashville, Tenn., said he tried to handle the issue internally for years. But after several unsuccessful attempts, he filed the lawsuit. McReynolds continues to work for Merrill Lynch to this day.
After the suit was filed, Bish said the law firm found similar cases of discrimination at Merrill Lynch branch offices across the country. Blacks, she said, were being denied the same business opportunities that whites routinely received, including being on good teams and scoring lucrative client accounts. The alleged bias resulted in the lower pay and higher attrition of blacks.
Because of the staff-ranking system, in which client accounts are distributed to brokers or teams based on revenue generated, blacks were “disadvantaged because they weren’t receiving the same kinds of business opportunities,” said Bish, who called the practice “systemic.”
According to the complaint, the plaintiffs also alleged that bonuses were based on previous production levels that were the product of Merrill Lynch’s underlying discriminatory policies.
At the time the lawsuit was filed, there was approximately one black broker for every 75 at Merrill Lynch, according to The New York Times.
The case had previously gone through two appeals at the United States Supreme Court.
Bill Halldin, a spokesman for Bank of America, which acquired Merill Lynch after the lawsuit was filed, would not comment on the specifics to MSNBC.com, only saying, “We’re working toward a very positive resolution of a lawsuit filed in 2005 and enhancing opportunities for African-American financial advisers.”
The settlement is expected to be considered by a federal judge on Sept. 3 to determine if it is fair and adequate. After that judgement a notice would be sent to plaintiffs to decide if they want to participate or opt out.
Bish said the plaintiffs “have persevered for such a long time and through a lot of adversity to achieve what we think it is a very important and meaningful resolution for African-Americans.”