WHEN lurid sex harassment charges rocked Wall Street in the 1990s, the Chicago law firm Stowell & Friedman fielded a torrent of calls from women who blocked their telephone numbers on caller ID and initially refused to reveal their names out of fear of retribution from their employers.
Over the course of several conversations, women on Wall Street who were subjected to groping, pay disparity and vulgar office jokes eventually opened up to the firm’s lawyers. In the end, 1,900 women joined Martens v. Smith Barney, the class-action lawsuit that became known as the boom-boom room suit. The firm paid $150 million to women who filed claims through a dispute resolution system as part of settlement and agreed to hiring and promotion goals among other reforms.
Fast-forward 17 years, and such landmark cases are not as prevalent. Wall Street’s women are more aware of their rights and are not so timid anymore, says Linda D. Friedman, a partner at Stowell & Friedman. Still, she says her firm does a lot of work these days behind the scenes, assisting women who face discrimination but are reluctant to pursue litigation because of the repercussions it would have on their careers.
Many do not have the option of suing at all, having been required as a condition of employment to agree to industry-run arbitration for job disputes. For women signing so-called mandatory arbitration agreements, discrimination cases are handled in private proceedings run by arbitration panels of the Financial Industry Regulatory Authority, the securities industry’s self-regulatory body. Supervisors or other individuals who lose in Finra discrimination cases are not required to reveal it in their public Finra broker dossiers, which include disciplinary actions.
Civil lawsuits are not completely out of the question over claims of harassment and discrimination though, because not every industry employee is obligated to agree to arbitration before they are hired. One recent case involves Debra S. Hayes, a marketing assistant at a retail office in Erie, Penn., of the brokerage firm Waddell & Reed, who filed a lawsuit in the United States District Court for the Western District of Pennsylvania on Nov. 20. Her suit listed allegations that rivaled those outrages that went on at the Garden City, N.Y., branch of Smith Barney that housed a basement party room known as “the boom-boom room.â€
In her complaint, Ms. Hayes describes a supervisor who badgered her for dates, threw staplers at her and pounded on her desk when she refused his advances. Eighteen days after she reported the desk-punching incident, Ms. Hayes says she was fired.
Waddell argued in a motion to dismiss that her complaint did not show that she filed the required forms with the Pennsylvania Human Relations Commission, and that the court didn’t have jurisdiction over her claims. The firm’s spokesman, Roger Hoadley, declined to comment on the case, as did Michael E. Grenert of the New York law firm Liddle & Robinson, who represents Ms. Hayes.
In another pending case, five female former Citigroup employees are seeking class-action status in a lawsuit that says the bank disproportionately fired women in a series of layoffs in 2008 in the public finance department. Although 89 percent of Citi’s managing directors and directors in the department were men in 2008, only 55 percent of the managing directors and directors who were let go were men, according to the suit.
A Citigroup spokeswoman, Danielle Romero-Apsilos, said in an e-mail that the plaintiffs were just five of 70 men and women who lost jobs in the public finance department and that the facts did not support their claims of gender discrimination.
Goldman Sachs has also been accused of discrimination against women in its compensation, promotion and performance evaluation practices in a lawsuit by three former employees who are seeking class-action status. Last month a court ruled that the case of one of the employees must proceed through arbitration; the two other plaintiffs did not sign arbitration agreements and are not affected by the ruling. A Goldman spokesman, David Wells, declined to comment on the case.
Women who sue and win often find out that going public means leaving the industry. Allison K. Schieffelin, a former saleswoman at Morgan Stanley, who received $12 million as part of a settlement with the brokerage in 2004, is now the chief executive of a Connecticut lighting manufacturer. Laura Zubulake, a former saleswoman who won $29 million from UBS in 2005 in a jury trial of her discrimination charges, is an author and lecturer on the use of e-mail in litigation.
Wall Street’s culture is extreme compared with that of other businesses, said Joan C. Williams, a gender expert and law professor at the University of California Hastings College of the Law in San Francisco.
Women in finance are coping with “the kinds of problems that women in most industries experienced in the early 1970s,†said Ms. Williams, who recently completed 127 interviews of high-achieving women across a range of fields for a forthcoming book.
In her research, Ms. Williams said she learned that Wall Street women were operating in an atmosphere where the perception that women were not suited for the job was so acceptable that men often discussed it openly. The Wall Street interviewees “were by far the most apprehensive about talking to me.â€
The layoffs on Wall Street have also thinned the ranks of women substantially since the credit crisis of 2008. A report on workplace diversity circulated to members of a trade group, the Securities Industry and Financial Markets Association, said that among its nine largest members, women as a percentage of total staff declined by four percentage points between 2007 and 2011, to 36 percent. Data from the Bureau of Labor Statistics shows an 11 percent decline in the number of women in the finance and insurance category since 2007, compared with a 1.6 percent decline in the number of men.
Pay disparity remains a problem, too. When the Government Accountability Office last evaluated median pay for full-time managers at financial firms in 2007, women were making 58 cents for every dollar that male managers made. It was the worst pay gap of 13 industries examined in the report.
For those cases that move forward, most try to remedy the underlying problems. Banks and firms typically agree to settlements that include clauses that promise better pay and promotion policies for all women, as well as specific goals in hiring women. Historically, such efforts have had mixed results.
Merrill Lynch agreed in a 1976 settlement with the Equal Employment Opportunity Commission that 18 percent of its brokerage employees would be female by 1980.
When it was sued in the class-action lawsuit Cremin v. Merrill Lynch in 1997, it still had not reached that goal. As of 2003, 15 percent of Merrill’s brokers were female. Bank of America, which acquired Merrill in 2008, declined to disclose what portion of Merrill’s brokers were women today.
Elizabeth Grossman, a regional lawyer in the New York district office of the commission, says gender-related complaints against financial firms are down slightly, to 29 percent of new charges filed with the agency last year, from a 10-year peak of 33 percent in 2005.
Most of those cases will settle discreetly, with no trace of evidence in court files or Finra records. But Ms. Grossman saidthe problems persist.
“We are still receiving charges which allege very rampant sex harassment in certain workplaces in the financial services industry,†Ms. Grossman said.
