George McReynolds has been working at Merrill Lynch as a financial adviser for over three decades, though he often feels isolated and unfairly treated by management. Recently, he filed a racial discrimination lawsuit against the company, along with about 1,400 other African American brokers. The suit was tumultuous, lasting about eight years and ultimately concluding in a record-breaking $160 million settlement. Employment lawyers at Pintas & Mullins Law Firm take a closer look into this historic case.
McReynolds joined Merrill Lynch in 1983, at their Nashville office, where few other black brokers were employed. He noticed an array of racial bias issues from the start, but enjoyed the work so kept his opinions at bay. In 2001, however, after a particularly transparent racially-motivated incident, he could no longer keep his mouth shut.
That year, he was assigned to team up with two other Caucasian brokers, where they were to pool all their accounts and equally divide profits. McReynolds noted a number of problematic issues within the team , including that the majority of accounts came from McReynolds, and constant disputes on how to handle them. By 2003, the team split up, with most accounts divided between the two white brokers, resulting in a $40 million loss in client assets for McReynolds. He was also annexed to a new office directly outside the women’s restroom.
In 2004, a female Merrill employee successfully sued the company for gender discrimination and won about $2.2 million. This case was wrested from a slew of lawsuits filed in the 1990s, by women who claimed the financial industry systematically discriminated against female employees (the same is true of tech companies, an expose of which can be found here, via the New Yorker). At the time of the gender lawsuit, women made up about 33% of Merrill’s managers and executives. For African Americans that number was a staggeringly dismal 4%. At present, fewer than 2% of Merrill’s brokers are black.
McReynolds saw this injustice, lived with it for 30 years, and finally did something about it. His case, which he filed with the help of a Dallas-based Merrill employee, Maroc “Rocky” Howard, lingered in court for eight years and withstood numerous appeals. Ultimately, in the largest racial bias settlement ever in the U.S., McReynolds and 1,400 other similarly-situated brokers won $160 million.
In his complaint McReynolds affirmed that, though unintentional, there was a systemic racial bias in Merrill’s practices. This is an exceptionally broad claim; most racial bias lawsuits allege very specific incidents against individual employees. Merrill claimed the fault rested in society – white brokers simply have more accessible connections and greater network of wealthy potential customers to invest. Plaintiffs did not contest this, instead noting that though this may be true, the societal problems were further exacerbated by Merrill’s policies.
Specifically, plaintiffs cited the company’s practices in assigning
teams and distribution of accounts, asserting that black brokers were
both less likely to be asked to join teams and less likely to have quality
accounts transferred to them. In 2012, the Seventh Circuit Court of Appeals
granted the brokers class-action status and affirmed that Merrill’s
policies did have the potential to be discriminatory. A trial was set
for early 2014, however, both parties eventually agreed to the settlement.
In addition to the $160 million in cash, the settlement also includes stipulations for an array of programmatic changes at Merrill. The judge specifically noted that there needed to be institutional reform not only at Merrill but throughout the entire financial industry. As a result of the suit, the company will change how it distributes accounts to new brokers, as well as establish a coaching team for African American trainees, to be overseen by a committee of advisers. McReynolds will be on that committee.
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