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The “most reluctant plaintiff on the planet.” That was how Alison Schieffelin described herself to reporters following her celebrated sex discrimination complaint against Morgan Stanley. It isn’t hard to see why. After filing charges with the Equal Employment Opportunity Commission, Schieffelin lost her high- earning position as a bond trader. And the suit, commonly viewed by colleagues as “career suicide,” left her without other employment offers. But it had an unusually silver lining. Under a settlement reached in July, she will receive $12 million. The firm will also pay $40 million to other women who claimed discrimination in pay and promotion, and will earmark $2 million for diversity training and related programs. The award was the nation’s second largest in a gender discrimination case, and the largest ever on Wall Street. This settlement, like those reached in similar class action litigation against Merrill Lynch and Salomon Smith Barney, sends a message long overdue on Wall Street. The conduct at issue in these cases often revealed sexism in its crudest forms. Smith Barney offices reportedly hosted strippers and played pornographic videos. Morgan Stanley managers allegedly took clients to topless dance clubs, excluded women from social events and tolerated blatant sexual harassment. Substantial statistical evidence in all of these cases also suggested patterns of discrimination in pay and promotion. In a culture where money talks, the size of these verdicts is getting Wall Street to pay attention. Merrill Lynch and Salomon Smith Barney have already paid more than $100 million each to settle sex discrimination claims. But it may be the publicity, rather than the payouts, that are having the most significant impact. Some prominent Wall Street women, including one of the Smith Barney plaintiffs, have described the Morgan Stanley settlement as “pocket change” to a firm that nets more than $1 billion a quarter. But the testimony that would have come out at trial could have cost considerably more over the long term in reputation, recruitment and retention. Women constitute a third of the leading business school classes; Wall Street firms can ill afford a culture that excludes or repels so much talent. Yet despite recent litigation, firms have not taken the steps necessary to change their culture. According to a 2003 report of the Securities Industry Association, women’s representation in securities employment has declined from 43% in 1999 to 37% in 2003, and the number of women in executive management positions declined from 21% to 17%. Men still constitute about 70% of investment traders, bankers and brokers, and two-thirds of officers and managers in the securities workplace. Muriel Siebert, the first woman to gain a seat on the New York Stock Exchange, who now chairs her own firm, attributes the “brain drain” at the top levels to unequal advancement opportunities. Qualified women seldom sue, but they often vote with their feet. Altering these patterns will require major changes in Wall Street policies and priorities. The reforms required in recent litigation settlements point in the right directions. Firms need better gender- equity training programs, complaint procedures, enforcement structures and monitoring systems. Reports from research organizations like Catalyst also offer a broad array of information and best practices that are necessary to level the playing field. These include confidential surveys and statistical comparisons, which can help identify patterns that perpetuate under-representation. Fundamental changes Workplaces on Wall Street, just as those in corporate America generally, need to become more “family friendly” in practice, not just in principle. Reforms are especially critical at the top levels. The sweatshop schedules expected of women like Schieffelin are impossible to reconcile with significant caretaking responsibilities. This is not a modest agenda. But it is essential for any firm that wishes to succeed in an increasingly competitive environment. And it is surely within the capacity of securities analysts to run the numbers on gender equity, track their progress and hold managers accountable for the results. What has perpetuated the problems on Wall Street is less ignorance than indifference. The managers who groped employees, patronized strippers and told women to “stop whining” surely realized that their conduct was sexist. What they did not realize was that it would have consequences. It is consequences that matter. Salomon Smith Barney got a message when, under its first woman chief executive officer, some successful brokers lost their jobs because of misconduct toward female colleagues. Wall Street will change when those in positions of power are committed to using their influence on behalf of equal opportunity. The Morgan Stanley settlement is a reminder of what happens when they are not. Deborah L. Rhode, an NLJ columnist, is the Ernest W. McFarland Professor of Law at Stanford Law School.

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