Gender Discrimination in the Securities Industry

If the securities industry hoped 2006 would bring the last of a decade-long era of sex bias and civil rights suits, that hope died in early January when Oppenheimer & Co. and Dresdner, Kleinwort, Wasserstein Services became the most recent defendants in a series of suits pitting women against financial-services firms.

These cases focus on equity in promotion and financial compensation as well as more overt discrimination, such as hostile work environments. Oppenheimer and Dresdner join Merrill Lynch, Morgan Stanley, Smith Barney and USB, financial-services firms female employees or the Equal Opportunity Commission (EEOC) have sued for sex bias.

Whether the suits and negative publicity about gender inequality will change Wall Street is questionable. Many plaintiffs’ attorneys say Wall Street firms have an inbred culture of bias against women, but securities firms’ lawyers say that increased awareness, training and a rising proportion of women in higher ranks signal a true change in how women in finance are viewed and treated in the finance industry.

Michael Delikat, a partner with Orrick, Herrington and Sutcliffe and chair of the firm’s Employment Law Practice Group, says, “We’re clearly in the second generation of these discrimination cases, which are much more focused on promotional and pay disparity issues as opposed to out-and-out discrimination.”

A number of issues fall under the general heading of sex bias or sex discrimination, according to Title VII, a federal law prohibiting discrimination in employment based on factors such as race, color, ,ethnicity, national origin or gender. The law also prohibits dealing differently with employees or job applicants based on their gender, and setting policies that have a predominately negative effect on a particular gender.

In the Oppenheimer case, the EEOC alleges that the company denied interviews to women seeking broker positions; the company denies the allegations. In the Dresdner case, six women have filed a $1.4 billion suit, claiming that the company denied them promotions and increased pay and also subjected them to harassment; the company denies the charges. Brokerage firms including Smith Barney, Morgan Stanley and Merrill Lynch in recent years have settled a number of other cases alleging harassment and discrimination.

To stem the tide of expensive and time-consuming litigation, Wall Street firms turn to employment training experts and  initiatives to make sure managers and employees know the law and how to follow it, says Terri M. Solomon, a shareholder with Littler, Mendelson with more than 25 years of employment and labor law experience. Solomon conducts training on topics such as effective management and avoiding workplace harassment. “Employers are working hard to make sure that they institute the right policies in regard to discrimination,” she says, “and to fully inform their employees about how to implement these policies to avoid problems.”

Employers must establish for employees a clearly defined process for reporting harassment without fear of overt or covert retaliation, she says. Because no hard numbers are available to assess how women are progressing into top positions in the financial services industry, it is hard to say how much the suits have been the impetus for change at securities firms. The fact that the EEOC filed suit in the Oppenheimer case indicates that the federal agency believes the case has “significant public importance,” Delikat says, because the EEOC has limited resources, thousands of cases and it rarely litigates. However, he cautions, that doesn’t mean they will win.

For more information about this area, see our employment law overview for employees and our sexual harassment overview.