17 Jul 2020 Morgan Stanley sued by former Head of Diversity for racial discrimination and retaliation

Posted at 12:46h in Companies, Corporate Governance, Financial Institutions, Racial and Gender Diversity by

Ms. Booker, former Global Head of Diversity at Morgan Stanley, has pursued legal action against the bank claiming that she was fired last December after having pushed a plan aimed at helping black financial advisors.

Last June, Marilyn Booker has pursued legal action against Morgan Stanley for “race and gender discrimination, retaliation and unequal pay”. After having worked more than 25 years for the American investment bank, 16 of which spent has Global Head of Diversity, she affirms she was fired in December 2019 after pushing a proposal to get top executives in the division to adopt her plan to enhance a training program for black financial advisors so to help more minority employees succeed. Ms. Booker argued that around 100 of the bank’s sixteen thousand financial advisors are black and that there are only 41 Black employees appointed as managing directors among the thousands working within the group. In addition to this, she is also claiming unequal pay on behalf of over 40 African-American female employees. Morgan Stanley rejected all the allegations.

Ms. Booker is among one of the highest-profile employees to sue a bank in the recent past. In the last four years, other eight former black employees have sued the bank claiming that they were marginalized and isolated by their white colleagues, deprived of managerial position and kept out of meetings with potential new clients, and then been pushed out after speaking up. Further back in 2007 Morgan Stanley settled a $24 million class-action over middle managers’ treatment of black employees.

Within the last 15 years, almost all the main Wall Street banks have been sued for racial discrimination. Among them, Wells Fargo and JP Morgan have entered into a $35 million and $24 million settlement respectively in 2017 and 2015 to resolve lawsuits brought by black employees. Likewise, in 2013 Bank of America’s Merrill Lynch paid $160 million to settle claims by its black employees alleging that the bank “had a segregated workforce, including policies that steered black brokers into clerical positions and reassigned their accounts to white workers“.

According to data reported by the U.S. Equal Employment Opportunity Commission, less than 10% of non-clerical and skilled workers at US financial firms were black or Hispanic, a share significantly lower than that of the population. More precisely, in 2018, of the about 100,000 executives at financial firms, only 2,644 were black (and 3,682 Hispanic). For many, the causes of this phenomenon are rooted in the industry culture in which recruiters favor candidates coming from elite private universities (whose majority of students are notoriously white) and the internal corporate training model allows managers to favor junior employees whose background is similar to their own.

Wall Street’s whiteness is mirrored also in senior roles within Financial supervisory agencies. Research by the Georgetown University has shown that very few black regulators have been appointed to oversee the financial sector, with only 10 of them selected for most senior roles at financial watchdogs, out of the 327 appointed overall in the 19th and 20th centuries.

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