Bank of America Corp.’s Merrill Lynch brokerage won final court approval of a $160 million settlement of a lawsuit in which it was accused of denying black financial advisers the same opportunities as their white counterparts.
U.S. District Judge Robert Gettleman in Chicago overruled the sole objection to the agreement announced in August at a hearing today and said he’d immediately sign an order ending the lawsuit filed by Nashville broker George McReynolds in 2005.
“Hallelujah!” McReynolds, 69, said in an interview after the hearing. He has been with the firm for more than 30 years. The courtroom, filled with brokers and onlookers, erupted in congratulatory hugs and handshakes at the hearing’s end.
Over its lifespan, McReynolds’ case grew to include 16 more name plaintiffs and a class of at least 1,000 who claimed Merrill Lynch wasn’t giving them the same support and same business development opportunities as white advisers.
Bank of America, the second-biggest U.S. bank by assets, acquired the brokerage for $33 billion in 2009. The Charlotte, North Carolina-based lender denied discriminating against its black brokers. The case was set to go to trial next month.
The accord is the third largest in U.S. race-bias litigation according to data compiled by Bloomberg.
In agreements that included non-cash consideration, Coca-Cola Co. agreed in 2001 to pay $192.5 million. Texaco Inc. paid $176 million in 1997.
The lead plaintiffs’ lawyer, Linda Friedman, said in a September interview that operational changes agreed to by Merrill Lynch might increase the value of her clients’ settlement above those prior settlements. Friedman is a partner in the Chicago law firm Stoll & Friedman Ltd.
Immediate changes will be made to financial adviser training to reduce black attrition, Friedman said then. The firm agreed to appoint two coaches she described as “godfather rabbis” for black trainees.
“These new initiatives, developed in partnership with African American financial advisers and their legal team, will enhance opportunities for financial advisers in the future” Bill Halldin, a Bank of America spokesman, said today in an e-mailed statement.
The judge, who three times rejected bids to recognize a claims class, agreed to grant preliminary approval to the pact after a Sept. 3 hearing.
Gettleman today praised the lawyers involved for forging the settlement and said he hoped it would be a model and an inspiration to the financial business community.
“There has to be some kind of institutional reform here so we don’t repeat this again,” the judge said. “There’s still a lot of work to be done.”
He called the planned Merrill Lynch reforms a “huge step” and said he hoped they “filter through the entire industry.”
Gettleman said the resolution of the case would also give him the opportunity to discuss the issues it raised with his cousin and financial adviser at a different brokerage, whom he can now ask, “What’s going on at your firm?”
The case is McReynolds v. Merrill Lynch Pierce Fenner & Smith Inc., 05-cv-06583, U.S. District Court, Northern District of Illinois (Chicago).