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Morgan Stanley & Co. has been ordered to comply with subpoenas sought by a federal agency investigating race and sex discrimination at the Wall Street firm. Federal District Judge Gerard E. Lynch of the U.S. District Court for the Southern District of New York said Tuesday that he found “without merit” the firm’s arguments against compliance with the subpoenas issued by the Equal Employment Opportunity Commission (EEOC). The EEOC had sought the subpoenas in connection with charges of race and sex discrimination brought by four African American women at the firm. In the case of Dawn Simmons, an analyst with the firm’s Derivative Products Group, the commission sought in November 1999 both the personnel records of employees in Simmons’ division, as well as “all claims, formal or informal, internal or external, of race discrimination and harassment” made against the firm over the last three years. The commission also sought the firm’s response to those claims. Morgan Stanley contended that the subpoena would jeopardize a pending settlement agreement with Simmons that the firm said would provide her with “substantial benefits.” As part of that settlement, Lynch said Simmons was to not only use her best efforts to get the EEOC to back off, but to actually secure “termination of the EEOC’s pursuit of the matter, which she has been unable to do.” But Lynch said the problem was that Morgan Stanley is accusing the EEOC, by pursuing a broader investigation at the firm, of “blocking a favorable settlement for Ms. Simmons,” a position the judge said displayed “considerable chutzpah.” The judge wrote: ” … if the EEOC were foreclosed from pursuing investigations whenever the charging party whose charge occasioned the inquiry wished to settle with his or her employer, employers would be able to forestall investigations into their employment practices by ‘buying off’ any victim who had the temerity to complain.” “In short,” the judge said further, “nothing about Morgan Stanley’s conditional settlement offer compels the EEOC to withdraw its subpoena, or gives this court any basis to direct it to do so.” But Lynch limited the scope of the information to be surrendered to “formal complaints” against Morgan Stanley, finding that requiring the firm to provide informal complaints would be unduly burdensome. The judge ordered the EEOC to use the information only for “its legitimate investigative purposes,” and barred the commission from making it known to the public, “whether by press leak, Internet posting, or good old-fashioned gossip.” In June of this year, the EEOC also sought to subpoena similar records in connection with charges brought by three other African American women employees of the firm, and again included a demand for records about complaints against the firm. Although the issue of pending settlements was not involved in those cases, Lynch’s ruling on Tuesday applied to that subpoena as well. Lynch compared the subpoenas with those issued last year in the high-profile case of Allison Schieffelin, a Morgan Stanley principal who had been denied a promotion to managing director, and went on to allege a widespread pattern of sex discrimination at the firm. In Schieffelin’s case, U.S. District Judge Denise Cote of the U.S. District Court for the Southern District of New York enforced a subpoena sought by the EEOC, but only as to “formal, written” complaints of discrimination. Cote also issued a protective order limiting the EEOC’s dissemination of the produced materials. Elizabeth Grossman, Sunu P. Chandy and Katherine Bissell represented the EEOC. Ronald M. Green, Evan Spelfogel and Frances M. Maloney, of New York-based Epstein Becker & Green, represented Morgan Stanley & Co.

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