Despite money and power, Wall Street is not immune from harassment and discrimination claims -- claims that will likely rise in number in the wake of the intense media glare surrounding recent actions against Smith Barney and Merrill Lynch. With a series of high-profile cases filed against these and other industry giants, it appears that any one of the many brokerage firms on Wall Street, as well as other financial services institutions, could be targets in the latest effort to eradicate harassment in the workplace. And, as these firms continue to pay huge sums of money to settle such claims, the media, plaintiffs' lawyers and government agencies continue to focus their attention on the problem of sexual harassment in the financial services arena.
In 1996, more than 20 current and former employees of Smith Barney, Inc. surprised nearly everyone on Wall Street by participating in a class action sexual harassment and discrimination suit. Representing a potential class of 20,000 people nationwide, the Smith Barney plaintiffs claimed that male employees ran what they called a "boom boom room" in one office, where the men hung toilets on the ceilings, drank Bloody Marys from a barrel and routinely subjected women to lewd pranks.
Those charges led to a lot of headlines and eventually to a settlement in which Smith Barney agreed to pay plaintiffs' lawyers' fees and to invest $15 million on diversity training. The agreement did not establish a cap on monetary damages and allowed any woman employed by Smith Barney during the past five years to have her claims heard. Some experts predict that Smith Barney could end up paying more than the $245 million to fully compensate its female workers.
Apparently sensitized to harassment issues, Smith Barney made headlines again in April 1998, when it fired two employees for allegedly having viewed pornographic material on company computers. Many believe that companies should be concerned about employees who view and/or circulate offensive materials on company computer systems, given that such materials could be used as evidence in all sorts of discrimination and harassment claims. In Owens v. Morgan Stanley & Company, 96 Cir. 9747 (S.D.N.Y. 1996), for example, the company was faced with a $60 million race discrimination lawsuit brought by two black employees who based part of their case on racist jokes that were allegedly e-mailed through the company's computer system to white executives.
Following the Smith Barney harassment case, a group of female brokers in Chicago filed a sex discrimination suit against Merrill Lynch. In addition to complaints of sex discrimination in the firm's handling of certain conditions of employment, the female brokers made classwide allegations of sexual harassment at Merrill Lynch. In a settlement announced May 4, 1998, Merrill Lynch agreed to pay $5 million in legal fees as well as a total of $600,000 to the eight named plaintiffs.
Other cases have sent shockwaves through the financial services industry:
- Lew Lieberbaum & Co., paid $1.75 million to settle a sexual harassment and discrimination suit filed by former employees. Additionally, the company agreed to register each member of its staff for sensitivity training to prevent harassment in the future. In this case, the women claimed that senior staff frequently made demands for sexual favors, hired lesbian strippers for mid-afternoon office events, exposed themselves to women walking to the bathroom, fondled female employees and frequently screamed obscenities at female employees.
- In May 1997, Gruntal & Co., another major securities firm, agreed to pay $750,000 to settle a sexual harassment suit filed by six female workers. The six plaintiffs complained that one manager frequently ran his fingers over their bodies, including their breasts, buttocks and between their legs, and often gave them unsolicited backrubs. Other managers asked female employees for sexual favors and sometimes passed around sexually explicit cartoons and other materials.
Merrill Lynch made legal headlines again with a sexual harassment and discrimination suit filed by a former employee of its Wellesley, Massachusetts office. The plaintiff, Susan Rosenberg, alleged that she was terminated because of her age and sex and that at one point a supervisor handed her a vibrator when she went into his office.
Amid the growing number of harassment complaints involving Wall Street, then-New York State Attorney General Dennis C. Vacco held a one-day program in 1998 entitled, "Public Hearing on Gender Discrimination in the Securities Industry." Vacco reportedly used the hearing as an opportunity to investigate sexual bias throughout the financial services industry. Several women gave very graphic testimony regarding male co-workers, supervisors and senior management of Wall Street firms who grabbed female workers, called female workers obscene names, rubbed women's breasts or exposed themselves to women walking by their offices. Newspapers duly reported such testimony with lurid headlines like: "Wall Street Portrayed as Hellhole for Women" and "Money and Power: For some It's a Beastly Combination."
At this time of heightened awareness by both government agencies and plaintiffs' lawyers, brokerage houses and other financial services institutions would be wise to evaluate their own susceptibility to sexual harassment claims. At a minimum, such firms need to disseminate anti-harassment policies and to train employees on acceptable and unacceptable behavior, including that related to Internet or e-mail use. Failure to do so could result in a rash of harassment claims and a significant hit to the company's bottom line.