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Wed, Jul 14, 2004 - Page 12 News List

Morgan Stanley settles sex-bias suit

BREAST-SHAPED CAKES To avoid what might have been an embarrassing trial, the Wall Street giant sacrificed the equivalent of 2 percent of its first-half earnings

REUTERS , NEW YORK

Allison Schieffelin leaves Manhattan Federal court in New York on Monday after settling a sex discrimination suit brought by the Equal Employment Opportunity Commission against Wall Street brokerage firm Morgan Stanley. The settlement includes a US$12 million award for Schieffelin, the former Morgan Stanley bond seller at the heart of the allegations.

PHOTO: AP

Morgan Stanley agreed on Monday to pay US$54 million to settle sex bias charges filed on behalf of hundreds of women who complain-ed they were denied raises and promotions and subjected to lewd behavior at the huge US investment bank.

The settlement announced by US District Judge Richard Berman allows the Wall Street powerhouse to avoid an embarrassing public showdown over claims by women that they were groped, slapped on the buttocks and faced office antics such as stripteases and breast-shaped birthday cakes.

"This is a watershed in safeguarding and protecting the rights of women on Wall Street," said the judge, who announced the settlement just as opening statements were to begin in what would have been a landmark, and graphic, trial.

Based on claims of 340 women who worked in the company's institutional-equities division since 1995, it would have been the nation's first gender-bias trial of a brokerage based on claims brought by the federal government's Equal Employment Opportunity Commission (EEOC).

As part of the deal, Morgan Stanley denied any wrongdoing and said it had always treated women fairly and equitably.

"We are proud of our commitment to diversity," Philip Purcell, chairman of Morgan Stanley, said in a statement. "We look forward to working with the EEOC in accomplishing our common goals."

Steve Thel, a professor of securities law at New York's Fordham Law School, said, "A settlement will be viewed as an admission that [Morgan Stanley] misbehaved."

The settlement represents about 2 percent of the US$2.45 billion in profits Morgan Stanley made in the first half of this year.

Earlier this year, Merrill Lynch agreed to a US$2.2 million settlement with a former financial consultant, one of about 900 women who filed gender discrimination suits against the firm between 1991 and 1997.

Federal employment regulators hailed the significance of the Morgan Stanley case brought by the EEOC.

"It's the first settlement of its kind," said Elizabeth Grossman of the EEOC. "We hope this sends a message to other employers on Wall Street to take discrimination seriously."

The broad impact would be difficult to measure, said Carlin Meyer, a professor at New York Law School, who said change comes "at the margins."

"There will be a little cutting back on the strip club outings, a little more incremental power to human resource departments," she said, "but when it comes to core hiring and promotions, the change will be slower."

Under terms of the deal reached over the weekend, Morgan Stanley pays a total of US$54 million, US$40 million of which is earmarked in a fund to pay awards to claimants.

US$12 million will go to resolve the claims of bond trader Allison Schieffelin, whose complaint filed in 1998 helped launch the case.

She accused the firm of refusing to promote her to the high-ranking post of managing director because of her gender. She also complained that the company engaged in such discriminatory conduct as allowing men-only golf games and strip-club visits with clients.

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