Bank of America finds itself back in hot water over retention bonuses at its recently acquired Merrill Lynch unit. This time the furor is being raised by female employees at the firm who claim they received much smaller bonus checks than their male colleagues.
Jamie Goodman, a financial advisor and 16-year veteran of Merrill Lynch, has filed a class action sexual discrimination suit against the brokerage firm and parent company Bank of America.
The case, filed in late June, claims BofA knew of Merrill's allegedly discriminatory pay practices yet calculated bonuses based on Merrill data anyway. The suit seeks unspecified damages.
“When it comes to layoffs or retention bonuses, we're seeing that the [negative] impact is much greater on women,” said Shona Glink, partner at law firm Meites Mulder Mollica & Glink, which is handling Ms. Goodman's class action case.
“When these big firms merge, women are being paid less to stay because their production is lower,” Ms. Glink explained. “And why is their production lower? Because they've been discriminated against by not getting the good partnership opportunities, the big clients, or the large territories. It's a vicious cycle.”
Gender discrimination claims on Wall Street are nothing new. Indeed, the National Council of Women's Organizations established its Women on Wall Street Project in 2004 to address the issue. But recent years have seen a lull in such claims. The last time Merrill Lynch faced a high-profile sexual discrimination suit was in 2004.
Now that thousands of Wall Streeters are losing their jobs, however, such complaints are on the rise. Gender discrimination claims jumped by nearly 15% last year, according to the Equal Employment Opportunity Commission.
The past two months have brought a drastic jump in the number of calls from women in corporate settings, said Martha Burk, director of the council's Corporate Accountability Project. She normally gets three such calls per month, but so far in July she's already received calls from 13 different women.
“And keep in mind that when I'm talking to one woman, she may be calling on behalf of 10 others,” Ms. Burk said. “Informally, we believe that companies think the recession is going to give them cover against causes of action.”
When Bank of America acquired Merrill Lynch in September, it said it would pay retention bonuses to Merrill's financial advisors based on commissions. The problem is, Ms. Goodman charges, “women were excluded from significant income earning opportunities” at Merrill Lynch, keeping their commissions artificially low. In addition, she alleges that even the few women who made it into the high-earning brackets, such as herself, “were disproportionately denied retention bonuses or received lower bonuses,” than their male counterparts.
Bank of America issued a statement saying it would vigorously defend itself, insisting that bonuses were merit-based and objectively calculated. It said the bank does not tolerate discrimination.
In recent years, brokerage firms have been fighting gender discrimination cases with mixed results. In 2004, Merrill fought a $14.6 million sexual discrimination case brought against the firm's London office by a female financial advisor. The court ruled in favor of the brokerage firm, confirming that her firing was not gender based, though it did scold Merrill for a “bullying” environment, and awarded the former advisor $100,000.
Morgan Stanley didn't fare as well that year. The firm settled a sex-discrimination case with the EEOC for $54 million a day before the trial was due to wrap up.
And more recently, in 2006, Dresdner Kleinwort Wasserstein fought a $1.4 billion sex discrimination suit brought by six female bankers, and retaliated with a counter-suit charging the women with “courting publicity” and trying to “smear the firm's reputation.” The case was ultimately settled out of court.
