As part of its $160 million proposed discrimination settlement with black financial advisers, Merrill Lynch has agreed to make sweeping changes that "may well change the landscape of Wall Street," attorneys said Thursday in court filings.
The documents filed in U.S. District Court in Chicago come days after attorneys for around 1,200 plaintiffs alleging racial bias announced a deal, which, if approved by a judge, would be one of the largest ever in a discrimination suit.
Among the measures, Merrill Lynch will create a "leadership council" to recommend ways to improve opportunities for African Americans; it commits to interviewing at least one minority candidate when selecting new executives, and it agrees to consider diversity issues when assessing directors' job performances.
Arguing the settlement has potential impact beyond Merrill Lynch, Thursday's documents urge U.S. District Judge Robert Gettleman in Chicago to approve it.
"Class Counsel respectfully submits that this case and settlement may well change the landscape of Wall Street as well as discrimination and class action law," one filing says.
Plaintiffs accused the Bank of America-owned Merrill Lynch — one of the world's largest brokerages with more than 15,000 financial advisers — of steering black brokers away from the most lucrative business; as a result, under a compensation system emphasizing production, they earned less than their white counterparts.
A distinguishing feature of the settlement is that many black brokers who joined the suit alleging discrimination will stay on at Merrill Lynch and be included in new structures meant to address their concerns, said plaintiff attorney Linda D. Friedman.
Plaintiffs typically quit or are fired long before settlements in such civil cases, but in this case "the plaintiffs will be a part of the change," she said.
Merrill Lynch spokesman Bill Halldin issued a brief statement on Thursday calling it a "very positive resolution of the lawsuit filed in 2005 and will enhance opportunities for African-American financial advisers."
While it agreed to address issues of diversity in the workplace, Merrill Lynch doesn't admit any wrongdoing in the settlement. In filings during eight years of litigation, it denied the discrimination allegation and staunchly defended its compensation programs.
"All (financial advisers), regardless of race, are judged by the same metric," one of the company's filings argued. "The rule is simple: produce more, earn more."
Plaintiffs claimed discrimination pervaded Merrill Lynch, at least partly because the company employed relatively few African-Americans overall. In a 2009 plaintiffs' filing, they contended that fewer than 2 percent of the brokers at Merrill Lynch were black.
Other changes Merrill Lynch agreed to, according to Thursday's filings, include increasing the amount in its diversity fund to $1 million a year to pay for business development events for minority and female financial advisers.
A status hearing in the case is scheduled for Sept. 3.
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