E-Mail this Article

Merrill Lynch dodges high-profile gender bias suit

Apr 25, 2014 @ 11:43 am

By Mason Braswell

gender bias suit, discrimination, supreme court, merrill lynch
+ Zoom

In an industry that has racked up its share of highly publicized discrimination claims, Bank of America Merrill Lynch managed to dodge at least one bullet this week after a Supreme Court judge in New York dismissed a complaint brought by three former female trainees.

In her ruling, Judge Cynthia S. Kern said that Merrill Lynch had effectively shown that the 2009 firing of the three trainees, Sara Hunter Hudson, Julia Kuo and Catherine Wharton, was not out of bias but related to the firm's decision to reduce its trainee head count significantly in response to financial market declines.

The firm had legitimate cause for termination on the grounds that the three were among the lower performers in the group of 28 trainees at the firm's branch on Fifth Avenue in New York, she said. The firm let go 11 other trainees from that branch at the same time.

The dismissal comes as many large brokerage firms face a handful of large discrimination complaints and class actions.

Last September, Bank of America Merrill Lynch said it would pay a group of former female advisers $39 million to settle a gender-bias class action. In December, the firm agreed to pay $160 million to African American brokers who brought a class action discrimination suit.

Just last month, a former Wells Fargo Advisors trainee filed a lawsuit alleging that the firm's attempts to recoup training costs from those who leave the program constitute a violation of labor laws.

While Ms. Hudson and the others did not claim a specific amount for damages, their case drew significant press last fall over allegations that a branch manager in the Fifth Avenue branch had required female advisers and trainees to read a book called "Seducing the Boys Club" and forced them to attend a presentation by the author, Nina DiSesa.

That manager, who was fired shortly thereafter over unrelated issues, had nothing to do with the female advisers' termination and the event was insufficient to support broader discrimination claims, Ms. Kern said in her ruling.

She decided that “while the 'Seducing the Boys Club' event may be validly assailed as inappropriate by plaintiffs, such event does not call into question the gender-neutral decision to terminate plaintiffs” on the basis of their not meeting production hurdles.

The judge also said that allegations related to unfair practices with regard to teaming and the assigning of mentors — a common theme in discrimination claims against brokerage firms — were “misplaced” and “insufficient.”

“Ms. Wharton has failed to point to any evidence that suggests any failure to help her bring in business was based on her gender or that management, as opposed to individual financial advisers or financial adviser trainees, actively formed teams,” Ms. Kern said. “Plaintiff's reliance on the alleged existence of a gender-biased culture at Merrill Lynch as evidence of pretext is unavailing.”

The decision marked the second time the case was denied. The plaintiffs had originally filed in federal court but had the case dismissed on similar grounds. They had sought to bring the case to state court where the “more protective” New York City Human Rights Law would apply, according to Gregory Chiarello of Vladeck, Waldman, Elias & Engelhard P.C., which represents the three.

He said the group planned to appeal.

Bank of America Merrill Lynch declined to comment through a spokesman, William Halldin.

Ms. Hudson and Ms. Kuo are currently employed as registered investment advisers at Fairport Capital Inc. in Arizona, according to Finra records. Calls placed to the firm requesting comment were not returned.

Your Compensation

Does your pay stack up?

InvestmentNews' National Adviser Compensation Database provides detailed, regional compensation information on more than 20 different positions within a financial advisory firm.

Compensation & Staffing Study

Is your firm paying competitive compensation and employee benefits? Find out now by ordering the 2013 Compensation & Staffing Study.

Must Watch

Featured Video

Interest Rates and Income Investing

Sponsored by Federated Investors Inc.

Get Daily News & Intel

Breaking news and in-depth coverage of essential topics delivered straight to your inbox.



The information entered on this page will not be used to send unsolicited e-mail, and will not be sold to a 3rd party.

REMINDER: This service is for personal use only. For commercial reprints, Web links and e-mailings please contact our Reprint Sales Manager at (732) 723-0569.

X

Subscribe and SAVE over 72%

View our best offer
Subscribe to Print