Black employees of Merrill Lynch will finally get a semblance of justice, as the financial services firm agreed to pay $160 million to settle a racial discrimination lawsuit that was initially filed in 2005 by longtime broker George McReynolds.
The $160 million settlement is the largest sum ever paid out in a racial discrimination suit by an employer in the U.S., according to the New York Times.
McReynolds, a Nashville-based broker who still works for Merrill Lynch, accused the brokerage of steering blacks into clerical jobs and diverting lucrative accounts to white brokers, resulting in lower pay and fewer career opportunities for black employees. While the suit was filed on behalf of 700 black brokers at the company, the number is expected to rise to an estimated 1,200 current and former black employees.
In the ultimate irony, at the time McReynolds filed the suit in 2005, Merrill Lynch was led by an African-American, E. Stanley O’Neal, who was named CEO and chairman in 2003 and who was one of the first blacks to hold such a lofty position on Wall Street.
O’Neal, who earned close to $50 million a year while CEO, said in a deposition that first-time white clients might not feel comfortable entrusting their money to brokers who weren’t white, according to the Times.
McReynolds and the other plaintiffs saw their case go through two appeals at the United States Supreme Court, with a court date set for next year. But the firm chose to settle rather than go through a potentially embarrassing trial.
“It’s been a long journey,” McReynolds told the Times.”There were a number of years where we didn’t know where it was going. I never gave up. As long as it was alive, I thought we had a chance.”
“This settlement is a perfect example of how institutional racism works,” Maya Rockeymoore, a policy analyst based in Washington D.C., told Al-Jazeera. “There may be no official policy on the books saying ‘whites only,’ but the effect of discriminatory practices fueled by racial bias and exclusionary attitudes has the same impact.”
Suzanne Bish of Chicago-based Stowell & Friedman, one of the lawyers for the 700 brokers who sued, told NBC that unfortunately the alleged pattern of under-hiring black brokers and Merrill Lynch’s practices of allocating customers are not unique to that company.
“They filed this lawsuit for all the right reasons. To not only change Merrill Lynch, but also to change Wall Street,” Bish said. “It was not an issue that was limited to Merrill Lynch, the underemployment of African-Americans and revolving doors of African-Americans.”
Her firm had previously filed and ultimately resolved a class-action lawsuit claiming sex discrimination by Merrill Lynch against female employees. But Bish said when McReynolds retained her firm to sue for race discrimination, “we were kind of stunned to realize the predicaments for African-American financial advisers were even worse.”
