The racial-discrimination suit against Merrill Lynch is under way again after settlement talks between African-American brokers and the firm came to a halt in early June.
Stowell & Friedman, the Chicago-based law firm representing the plaintiffs, is collecting the data that it needs to present in an affidavit to the court before a judge can grant the case class-action certification. The law firm says it is collecting “tens of thousands of documents” from Merrill Lynch that include details about broker earnings by race, length of service and branch-office location.
According to Mary Stowell, partner at the law firm, as part of the discovery phase, Merrill Lynch has requested the names of those who are being accused of making racial remarks to the plaintiffs. “[Merrill Lynch] is the one with the majority of the data, though, so it’s mostly us asking them for statistics,” she adds.
The suit was initially filed almost a year ago, in November 2005, when lead plaintiff George McReynolds, an advisor at the firm’s Nashville, Tenn., branch, claimed that Merrill Lynch engaged in systematic race discrimination and retaliation against African Americans, as well as unequal pay practices and opportunities.
The dispute appeared to be nearing resolution after several months of settlement talks, one of which Stan O’Neal, Merrill Lynch CEO, personally attended. (For more on O’Neal’s surprise visit to the settlement meeting, click here.)
But both sides called it quits in June when they could not agree on the amount of monetary payment that should be made to the plaintiffs. (To read more about the end of settlement talks between Merrill Lynch and defendants, click here.) “I am surprised that the talks fell through because it seemed like we were making such great progress. But it fell apart over money, and that’s not uncommon,” Stowell says.
Robert McCann, president of Global Private Client at Merrill Lynch, says the firm offered a settlement amount that the firm believed was both fair and appropriate. “We reached significant agreement on a number of diversity initiatives proposed by the financial advisors, and those ideas are now being implemented. However, when the discussions turned to a financial settlement it was clear that the two sides were far apart.”
Stowell expects to present an affidavit to the court in the spring. If a judge approves the class-action certification, then the suit could potentially involve about 700 past and present brokers. (To read more on discrimination in retail brokerage industry, read Registered Rep.’s March 2006 cover story.)