It is being reported that Bank of America is settling the largest racial discrimination suit against an American company in history of behalf of its Merrill Lynch unit. The settlement amount is said to be $160 million paid out to a class of 700 plaintiffs made up of former Merrill employees. The basis of the suit is that Merrill Lynch steered African-American employees away from client facing roles and diverted the highest paying accounts to white brokers. The settlement must now be approved by a judge.
Racial discrimination is one of the most unfortunate aspects of our business, and Merrill Lynch is by no means the only offender. And it's not just banks and brokerages, either. The media is just as guilty.
I remember the day Joe Jett blew up. There was a veritable media circus outside his apartment that morning waiting to pounce on him the minute he emerged. He left his apartment, waded through the sea of reporters, and hailed a cab and went to work wondering what all the fuss was about. The camera crews and reporters took no notice of him because it never occurred to any of them that the rogue trader who tanked Kidder, Peabody might be black.
Likewise, I wasn't two weeks into my first training program when I was told in no uncertain terms that we don't do business with women or blacks. Women, because they required too much hand holding and couldn't come to a decision quickly, and blacks, because they don't pay for their stock. I remember being pretty shocked by how cut and dried it was, having just come from the Marine Corps which, for all its faults, is largely a color blind organization.
The rare black employees had it no better, really. I can remember only two black brokers in my first office of 80+ guys. One had been there awhile and was just scraping by, and the other was actually in my training class with me and happened to be gay. He was a really great guy but was clearly in the wrong place, because he just didn't have a predatory bone in his body. He quit after a couple months and I found out he was later the victim of a hate crime, which is neither here nor there as far as the business is concerned, it just speaks to what a generally shitty world we live in.
It's unfortunate, but I have no difficulty believing these allegations. I sincerely hope (and I do believe) that things have improved for minorities over the past 20 years in our business. I won't pretend there isn't still racial discrimination, but I believe it isn't nearly as pronounced or overt as it once was, and I commend BAML for stepping up to right a wrong.
Equality is the linchpin of a meritocracy, and it boggles my mind that many of those who claim to want to be judged on their merits willingly look the other way in cases of obvious discrimination (not just racial discrimination, btw).
I'm certainly not blameless in this regard (evidenced by the fact that I chose to continue working in a place with such attitudes), but at least I've always wanted to know I was the best because I competed against the best, regardless of what color they were or where they came from.
Here's hoping this sort of ugliness is nearing its end on Wall Street.
Absolutely pathetic. No way in hell this is true. Racism is growing more and more and white people are at a major disadvantage right now in terms of lawsuits, school admissions, etc. I find this very hard to believe.
Curious to know what made you jump to that conclusion? Not exactly a well thought out response, I have to say.
lol...well since they're settling for $160 million...I'm going to go ahead and say they have some evidence to support the claim.
Curious as to what evidence was used against BAML & forced them to settle. Was it a trail of emails or recorded voice conversations or multiple cases of he-said/she-said? I haven't witnessed any forms of racial discrimination where I've worked, but have seen several cases & lawsuits where women were steered away from more high profile accounts and roles due to the reasons mentioned in above article.
My father in the 1980s was an SES at NHTSA. He got a racial discrimination complaint/suit filed against him for treating black employees harshly. He won the case when people of all races testified that he wasn't racist--he was hard on all employees blind of race or gender. I've always been skeptical of complaints about racial discrimination, especially since a racist incident can ruin a person's career and a company's image over night. It seems ludicrous to racially discriminate, and would have to be incredibly covert.
Human beings are incredibly tribal. In America, a free society of many races and cultures, you still see innate tribalism as Asians hang out with Asians, whites with whites, blacks with blacks, etc. My roommate several years ago was an Indian immigrant. Who were his closest friends? A bunch of Indian people. What does tribalism tell you about business? In a business where the vast majority of your clientele are white, you will rationally want your client facing people to be white, by and large. I see where ML would be coming from, but I also have to believe that the discrimination, so to speak, would have to have been very much on the down low. Remember, this isn't a court of law, and not even a civil court where we're talking about the preponderance of evidence--this was an out of court settlement, so the evidence was probably much looser. BAML probably decided that it would be better to make the case go away. $160 million is literally a rounding error to an organization that size (BOA had $2.3 trillion in assets in 2012).
$160M is quite valuable to BofA which has Net Profit of $4.1B last year. If you know anything about business, the bottom line is the only thing that matters. You woudn't to lose 4-5% of your profit overnight.
I am sensing there is smoke there. That's a large settlement for 700 people
Asset isn't exactly a good figure using which to benchmark the costliness of a $160mm settlement. For a company with profits in the single-digit billions by virtually any measure, $160mm isn't walking-around money. Chances are there is some weight to this claim if BofA is settling for that high of a figure.
Whether penalties like this are necessary / prudent is another argument, but I don't think anyone can dispute the presence of a legitimate claim here, given the settlement.
So just to add to your logic - white clients should deal with a white person, black client with a black person, Indian with an Indian?
while I do agree with you in the fact that the client would probably feel more comfortable if they are able to relate to the person they are dealing with (whether it be through ethnicity, gender or background) I still feel the logic behind this is wrong.
Judge a person by their work and skills. It is not right to take away that opportunity to close a big deal from them based on their color when they fully capable of doing their job.
In the age of digital communication, the big banks archive everything. It would not be surprising if there are a couple of emails that explicitly state move x account to y person. While one email may not be sufficient, a group of emails over a period of time may form a pattern. This is probably what they found. Hence, the settlement.
Eddie, makes a good point though. If you are going to compete and be the best at something, you want to be the overall best. No exceptions, asterisks, or exclusions.
A great article for everyone to read regarding this subject and the annivers. of the 'I have a dream...." speech:
http://takimag.com/article/he_had_a_dream_john_derbyshire#axzz2d5Nxmkzh
First of all, it's not likely that the $160 million is going to be paid out over night. That will probably get paid out over several years. It's highly unlikely it's going to take a 3-5% slice out of BOA's profits. There's almost certainly a line item in the financial statements that sets aside money for lawsuits and legal issues. There's almost certainly an expectation at a large corporation that lawsuits and legal costs associated with them are recurring and they probably have a reserve for that the way they hold a loan loss reserve in cash and have it issued on the income statement.
Second of all, I didn't at all suggest that whites should only work with whites, etc. I'm just pointing out that self segregation is extremely common and understandable. It's not right or wrong--it's human.
Because it's human, it's okay?
It's not ok because it's human, but it's ok, yes. Virtually every nation in the world is more racist than the United States. The fact that we have any racial integration at all is a testament to our country. Nevertheless, people will always self segregate--that's life.
And let me ask--did you even read my comment? I said it wasn't right or wrong--it's human. How do you get from that anything other than what was typed out?
Also, the payoff is to 1,200--not 700--plaintiffs. That's about $133,000 per person minus 8 years of legal bills, for alleged discrimination that occurred since the early 1980s. The OP falsely asserts that this is evidence that racial discrimination is still widely practiced. The article said that 5% of the 14,000 brokers were black in 2005, representing what was probably discrimination. Well, the black population is only 13% of the nation. I would say it's likely in general that blacks are statistically underrepresented in financial services. The article also seems to indicate that ML's statistics are based on its global population of financial advisors. Assuming ML doesn't have a huge presence of brokers in Africa, it seems like common sense that the black population would be underrepresented racially.
Where did I assert that?
Wow, I definitely didn't mean the OP. My bad. I meant the people earlier in the conversation. My bad. Didn't mean to hit you with that.
Definitely have a contra account for this type of thing.
ML - the gift that keeps on giving!
I'm curious if the recipients of the settlement will (1) invest at ML or (2) invest with black brokers. I ask only to troll the sensitive, I kid because I love. I'm thinking Dave Chapele did a skit on this type of thing....I'M RICH BIATCH!!
Eddie: ML didn't step up to right a wrong, they got SUED and then SETTLED after the realized that if they fought it any further they'd likely pay 10x that amount.
As a point of reference, the NFL is paying out its $756 million player concussion settlement over 20 years. So BOA is not likely to pay out $160 million of unexpected money tomorrow. For 25 years of alleged discrimination less huge attorney's fees paid out to the plaintiffs' lawyers, the settlement is a drop in the bucket if the allegations are true since the allegations are such that if true they were career altering. A small price to pay to make an 8-year problem go away, buried in the news of the day.
Bruh, you are way too comfortable with just brushing aside people throwing around the N-bomb in a professional environment and other blatently racist shit as a non-problem that will be buried in the news.
I don't know. But, I imagine it has something to do with the fact that BAML has billions of dollars and access to the top lawyers on Earth.
My point still stands, you are way too excited to brush the allegations aside like dust swept under a rug.
I doubt it was over nothing considering the settlement. If you read through the allegations, they're pretty wild and totally out of line.
"... and I commend BAML for stepping up to right a wrong"
Great article, thanks. But do you really think BAML would settle willingly to "right a wrong", as if it had some sort of conscience, whereas the more likely situation is that there existed evidence against the company and to save money by not going to trial it just settled?
or maybe I'm just missing the sarcasm?
Isn't BAML killing the ML name anyway?
@UFOinsider & @PutINweRK No, of course they're not doing it out of the goodness of their heart. Merrill fought it tooth and nail and so did BAC. But I'm gonna throw one into BAC's column here for recognizing that what happened was wrong, wasn't worth trying to wiggle out of, and offering to cut a big check. You take a win where you can get it.
@TNA Yes, Merrill is going away in the next couple weeks. I think BAC just wants to put all this kind of shit behind them. Worst acquisition ever? It's gotta be Top Ten.
@DCDepository I was going to respond to your screed but I see it's not worth it. You're clearly irrevocably red state to the point where you can't even read any more. When you said, "It will have virtually no impact on the company because nobody really knows if this is a money grab or if this was genuine." you must have somehow missed all the examples of racial discrimination I personally witnessed in my career. It was part of our training program, for fuck's sake. And then you bring Hey-Zeus! into it. Just beautiful.
How dare you call yourself a conservative? Seriously, how dare you?
@DCDepository
Stop talking.
Everyone in this thread is being a bit oafish about all of this. DC is taking a much more extreme right-wing stance than he needs to, and everyone else is being overly reactionary.
What?? I'm going to assume that your misspelling of Jim Crow is a fair indicator of your knowledge of the Jim Crow statutes, because this doesn't even make sense. Jim Crow laws enforced segregation de jure. That is, public places (schools, transportation, restrooms, etc.) were legally bound to policies of racial segregation in the Southern states. In short, Jim Crow was government policy enforced by the executive branch that commanded racial segregation. Nothing could possibly be further than Friedman's free market ideals. Though most people remain ignorant to the fact, the Northern states also exhibited segregatory behavior, with heavily concentrated areas of ethnic and racial groups, informal employment discrimination, etc. The difference is that the Northern states had no statutory policy enforcing discrimination. What segregation existed was there because of voluntary, contractual arrangements made between free individuals. That's a free market. Got it? This is laughable. Racism and segregation was a "market failure"? Lest we forget, segregation is the legacy of a hundred years of government-enforced subjugation and slavery. No Friedmanian capitalist society would permit such blatant breaches of personal property rights. Bankruptcy is an unnecessary extreme (employed by DC above, but unnecessary nonetheless). Any store that willfully discriminated against a significant customer base is voluntarily throwing away profit and is - by definition - disadvantaged versus peer businesses that choose not to discriminate. In the modern era, it's certainly not unreasonable that an openly discriminatory place of business would be lambasted to the point of bankruptcy. Either way, however, that business is voluntarily burning money, and if it so chooses to do so, that's their problem. You seem to be living in some fantasy world where the government outlawed racism. However, you would be best served to note that racism isn't illegal in the US. By virtue of your control over your own property, you could choose to - for instance - only allow Asians in your house. Your blatant, self-professed racism would be perfectly acceptable under current laws. That is because you have the right to enforce whatever policies you want over your own property, so long as they do not interfere with the property rights of others. Note that it is not within the bounds of my rights to enter your property at my will. Similarly, in a free market society, no business is bound by law to serve any and all customers. That doesn't mean that discrimination will become rampant. No, it's not. The repeal of Jim Crow laws happened because it is patently unjustifiable to enforce statutory discrimination in a free society. Do you even recognize the incredible contradictions in the quoted text above? Do you realize that "free market" and "excised through the literal force of federal law" are oxymoronic? I don't think you understand the definition of "free market". No, it doesn't (see above). People are free to oppress minorities. They are just banned from doing so under certain circumstances (employment, place-of-business, etc.). Why do you think the KKK still exists?I'll leave you with this:
The only reason - and I do mean only - why anti-subjugation policies and Supreme Court decisions were necessary to end segregation and slavery in the United States is because they were, for a long period of time, enforced by the government! No free market system - most certainly not Friedman's - would ever have permitted the government to enact policies suspending the basic protection of property rights for a swath of the population. In Friedman's world, there would have been no slavery or Jim Crow Laws in the first place, nullifying the need for legislative or judicial activism to remove it.
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