by Patricia A. Schaeffer, Vice President-Regulatory Affairs
Morgan Stanley & Inc. and plaintiffs’ law firms announced a multi-million dollar settlement of a discrimination lawsuit on behalf of approximately 2,700 female Financial Advisors and Registered Financial Advisor Trainees employed by the company since August 5, 2003. The lawsuit focused on gender inequality in the distribution of accounts and other business opportunities. The announcement was made by Morgan Stanley’s Global Wealth Management Group (GWMG) and the law firms of Mehri & Skalet, PLLC, Sprenger & Lang, PLLC, and Moody & Warner, P.C.
Financial Settlement:
The parties entered into a five-year settlement agreement that is still subject to court approval. The settlement is valued at over $70 million, starting with a lump sum payment by Morgan Stanley of $46 million which will likely accrue interest of over a million dollars. Morgan Stanley will make an additional, yet to be determined, payment to the Settlement Fund for the employer’s share of payroll taxes. The Settlement Fund will likely approach $50 million in total.
Programmatic Relief:
Additionally, the changes called for in the programmatic relief will increase the earnings of female financial advisors by at least $16 million over five years and the diversity efforts by the company over five years will cost an additional $7.5 million. Highlights of the programmatic relief include a new account distribution system, the appointment of independent external experts charged with developing innovative, novel programs impacting business and development opportunities for female financial advisors, and the appointment of an independent Diversity Monitor who will review account distribution data and other reports impacting fairness and equal opportunity in the brokerage house. A key feature of the settlement is said to be the creation of a new monitoring system to ensure that that the Settlement is carried out as intended.
Appointments:
According to a fact sheet released by one of the plaintiffs’ law firms, Dr. Kathleen Lundquist, President of Applied Psychological Techniques and Dr. Irv Goldstein, Senior Vice Chancellor for Academic Affairs for the University System of Maryland will be jointly appointed by the parties to develop innovative, meaningful, novel, and state of the art programs to improve several programs at Morgan Stanley, including their recruitment of women.
Prior Settlement:
This case is Morgan Stanley’s second major sex discrimination lawsuit in the last three years. In 2004, Morgan Stanley agreed to pay $54 million to settle allegations that it denied women equal pay and promotions in its investment bank.
The settlement is subject to the approval of the U.S. District Court for the District of Columbia.
A fact sheet on the settlement is available here.
