Another story about Merrill Lynch's corporate culture was also in the news recently. The two stories seem to have a common element: people at Merrill Lynch tend to undermine each other.
Merrill Lynch settles discrimination lawsuit
Wall Street brokerage to pay $160 million to hundreds of black financial advisers.
The (Nashville) Tennessean
August 29, 2013
For eight years, Nashville executive George McReynolds has been the face of a fight against racial bias at Merrill Lynch. On Wednesday, the company announced it would pay $160 million to settle a class-action lawsuit that was filed in 2005.
If approved by a federal judge in Chicago as expected, 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."
McReynolds, 68, has worked for Merrill Lynch's Nashville office since 1983. He still works there, even after filing the lawsuit in 2005.
According to his lawsuit, the company culture was "toxic" for African Americans. In 2005, only 700 out of its 14,000 financial advisers were African Americans. McReynolds was one of only two black brokers in Tennessee when he was hired in 1983. The Nashville branch didn't hire a second black employee until 1987.
Beyond its lack of diversity, Merrill Lynch would impede the careers of African-American employees it hired, the lawsuit claimed.
McReynolds' attorney, Suzanne Bish, noted that the settlement coincides with the 50th anniversary of Martin Luther King Jr.'s "I Have a Dream Speech."
"(McReynolds) and his wife are really amazing people who acknowledge that they are where they are because there was a struggle before them, and (they) think it's incumbent upon them to make things better for the next generation," Bish said.
Bish said the settlement should force changes beyond the company being 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."
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% 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."
Merrill Lynch prevented black brokers from working with high-profile clients, the suit alleged. It also promoted a companywide policy that encouraged associates to work together on certain cases, and blacks were generally excluded from these beneficial partnerships, the lawsuit said. Finally, after creating an atmosphere that prevented the success of African-American financial advisers, executives at Merrill Lynch would allegedly publicly badmouth the performance of minority employees, the suit alleged.
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.
Contributing: The Associated Press