African-American brokers lose latest legal round against Merrill
U.S. District Judge Robert Gettleman dismissed a bias lawsuit brought by African-American financial advisers challenging a broker retention bonus program at Bank of America Merrill Lynch.
U.S. District Judge Robert Gettleman dismissed a bias lawsuit brought by African-American financial advisers challenging a broker retention bonus program at Bank of America Merrill Lynch.
The suit claimed that the brokers were victims of systematic discrimination at the former Merrill Lynch & Co. Inc. and, as a result, received smaller retention bonuses from Bank of America when it acquired the struggling investment bank in early 2009.
The case — George McReynolds, et al., v. Merrill Lynch, Pierce Fenner & Smith Inc., Bank of America Corp. — is the second filed on behalf of 16 brokers at Merrill who claim that the firm steered more-lucrative accounts to white brokers. As a result, the African-American reps managed less money, produced less revenue for the firm and thereby received smaller bonuses.
In dismissing the case, however, the judge ruled that Bank of America’s bonus program did not show any intent to discriminate and therefore could not be challenged by the plaintiffs. Indeed, the bank argued that a decision to allow the lawsuit could put thousands of performance-based bonus programs at other companies at risk. “Knowledge of past and even present discrimination alone does not make it plausible that defendants actually adopted the adviser transition program with discriminatory intent,” the judge wrote in his opinion.
The dismissal is certainly positive news for the bank. “We’re pleased with the judge’s decision,” Bank of America spokesman Bill Halldin said.
It does not close the matter, however. The original lawsuit filed in 2005 was denied class action status by Mr. Gettleman last year, but it continues to make its way through the legal system. The judge’s decision on the class action status is currently being reviewed by a federal appeals court. A similar bias suit filed by female brokers at Merrill Lynch was settled last November.
“The court is saying that we can’t challenge the adviser transition program, but we can claim that bonuses were lower for African-American brokers because of discrimination,” said Linda Friedman, a partner at Stowell & Friedman Ltd. representing the brokers. “African-Americans want us to level the playing field and insist that the company comply with civil rights laws. We have no intention of abandoning the fight.”
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