Bank of America Corp agreed to pay $39 million to settle a gender bias lawsuit by female brokers who claimed they were paid less than men and deprived of handling their fair share of lucrative accounts, court papers made public on Friday show.
The settlement was disclosed less than two weeks after news that the bank reached a $160 million settlement with hundreds of black Merrill Lynch & Co brokers who alleged racial bias in pay, promotions and how big accounts were allocated.
About 4,800 current and former female financial advisers and trainees at Bank of America and Merrill, which the bank bought in January 2009, are eligible for the latest settlement.
The lawsuit filed on their behalf accused Bank of America and Merrill of intentionally discriminating by favoring male brokers when awarding pay, allocating client accounts and referrals, and providing professional and marketing support.
According to court papers, such practices created a “cumulative advantage” effect that perpetuated and widened earnings disparities by gender. Bank of America was also accused of retaliating against female brokers who complained of bias.
The three-year settlement agreement requires Bank of America to retain an independent monitor to oversee improvements to its practices, and hire a consultant to study how it “teams” brokers and how its teaming practices affect the allocation of accounts.
Bank of America did not admit wrongdoing in agreeing to the settlement, which requires approval by U.S. District Judge Pamela Chen in Brooklyn, New York.
“The world of financial advisers remains a very male environment in this company and this industry,” said Rachel Geman, a partner at Lieff Cabraser Heimann & Bernstein representing the plaintiffs, in an interview.
She said the settlement provides “significant monetary relief, as well as programmatic relief to help insure that women are on a fair playing field.”
Bill Halldin, a Bank of America spokesman, said the bank is pleased to settle, and that the accord “will enrich our existing diversity, inclusion and development programs, providing even more opportunities for women to succeed as financial advisers.”
Bank of America is based in Charlotte, North Carolina, and said it ended June with nearly 15,800 financial advisers.
The lawsuit dates from January 2007 when Judy Calibuso, a Miami-area broker who had worked for Bank of America or its predecessor Barnett Bank since 1995, filed a complaint with the Equal Employment Opportunity Commission.
Five women – Calibuso, Mary DeSalvatore of New Jersey, Jean Evans of Missouri, Dianne Goedtel of New York and Julie Moss of Louisiana – now lead the lawsuit, court papers show. Only Calibuso remains with the merged company, her lawyers said.
Large U.S. brokerages are often targets of bias lawsuits, and others have settled charges they unfairly deprived female brokers of compensation and opportunities for career growth.
In 2007, Morgan Stanley settled one such lawsuit for $46 million, while Citigroup Inc reached a $33 million settlement in 2008 and Wells Fargo & Co a $32 million accord in 2011.
“Generally, Wall Street has recognized the need for a level playing field for its employees and business interests,” Cara Greene, a partner at Outten & Golden who also represents the plaintiffs, said in an interview. “Strides have been made, but generally speaking women are still making less than men.”
The $160 million Merrill accord with black brokers is one of the largest by an employer of a U.S. racial bias lawsuit.
The gender case is Calibuso et al v. Bank of America Corp et al, U.S. District Court, Eastern District of New York, No. 10-01413.