Smith Barney's Woman Problem
Shortly after Pamela K. Martens began work as a stockbroker trainee at Shearson/American Express Co. in 1985, she got a taste of things to come. One day she went into the office of her branch manager, Nicholas Cuneo, to ask a question. Cuneo casually opened his desk drawer, took out a gun, and laid it down in front of him. As she hurriedly left his office, Martens concluded that Cuneo was sending her a message, loud and clear: I'm someone to fear. When Martens complained to another manager, he downplayed the incident, saying, "Oh, Nick just does that to intimidate the trainees."
Over the next 10 years at the New York firm's Garden City (N.Y.) branch, Martens endured a noxious atmosphere that favored Cuneo's cadre of male brokers and was hostile to women, says Martens. To Martens and other women in the branch interviewed by BUSINESS WEEK, Cuneo was a bully who had perfected the art of "intimidation, retaliation, and humiliation," as Martens puts it. "This man ran a fiefdom for 25 years with the most flagrant abuse of power with impunity."
In October, 1994, Martens began sending letters about the situation to senior executives at Smith Barney, which had acquired Shearson in 1993. Finally, she had enough, and in January, 1995, she hired an attorney to explore legal remedies. The same day Smith Barney's human resources department found that out, Martens received a letter from a human resources vice-president saying that Cuneo had been placed on a leave of absence. "While Mr. Cuneo has his positive qualities," the letter said, "it also appears that his conduct and manner have fallen short of the high standards which Smith Barney expects of its managers." Cuneo retired in October, 1995. But two days later, Martens was fired, on the grounds that she had not attended a compliance meeting.
On May 20 of this year, she and co-workers Judith P. Mione and Roberta O'Brien Thomann filed a class action in U.S. District Court in New York against Smith Barney and Cuneo. Mione, who is still a sales assistant at Smith Barney, says she was paid less than male counterparts and denied promotions. Thomann, a sales assistant who left the firm in 1994, says she was demoted after eight weeks of maternity leave.
STREET TROUBLE. Although the Martens suit cites only one branch office, it highlights an issue that has long dogged Wall Street: the small number of women brokers and branch managers and the inequitable and disparaging ways they are sometimes treated. The complaint, which alleges 19 kinds of sexual discrimination, mentions such problems as failing to promote women, paying them lower wages, reassigning their best customer accounts to men, and penalizing them for taking maternity leaves. Drawn up by Chicago attorneys Mary Stowell and Linda D. Friedman, the action claims that women make up less than 5% of Smith Barney's 11,000 brokers and fewer than 10 branch managers out of 440 branch offices. "It's an industry problem that most managers hope won't rise to the surface," says Perrin Long, an independent brokerage analyst. "Most of the problem lies at the branch manager level."
BUSINESS WEEK obtained the following account from an extensive interview with Martens, along with discussions and statements submitted to Smith Barney by five other women at the Garden City branch. A woman answering the phone at Cuneo's home who said she was his daughter responded that her father had nothing to say.
Smith Barney denies the central charges of the lawsuit. "The allegations of widespread, or a pattern of, discrimination against women are absurd," says Mary McDermott, a spokesman for Travelers Group Inc., which owns Smith Barney. "The suit is about one former broker and two sales assistants who are unhappy with one branch manager." McDermott says close to 13% of the firm's brokers are women. But she does acknowledge that only 8 of the firm's 390 branch managers are female.
McDermott further points out that Shearson owned the branch before August, 1993. When Martens lodged complaints, she says, Smith Barney responded promptly, putting Cuneo on a leave of absence as soon as her allegations were reviewed. "There are a lot of people who think Nick is terrific," McDermott says.
"BOOM-BOOM ROOM." Martens, 49, grew up in Mt. Clare, W. Va., a small coal-mining community. After moving to Long Island, she joined Shearson in 1985. She soon realized that Cuneo didn't like having women brokers around, even though there were only 3 women out of 58 brokers in the branch. Martens and other women in the branch say he took male brokers on golf outings while excluding women brokers. And he cultivated a frat-house environment: Drinking parties were held regularly for mainly male brokers in a basement space in the branch dubbed the "boom-boom room," which featured a toilet bowl hanging from the ceiling. One woman broker wrote in a statement that brokers in the bullpen, the open office area for trainee brokers, "were constantly burping and farting." Male brokers, and Cuneo in particular, used foul language in sales meetings, referring to women in their presence as "whores" and "c---s."
As office manager, former women employees say, Cuneo controlled a system of rewards and punishments. He favored chosen male brokers and abused certain women. Cuneo distributed new accounts to male brokers, including his two sons, who were brokers at the branch, while denying them to women brokers. "His close core of brokers in the office would cover up the most outrageous conduct on his part to secure future favors from him," according to broker Peppy Henin, who says Cuneo drummed her out in 1988.
Despite the obstacles, Martens avoided Cuneo and kept quiet. Over the years, she built an asset base of $187 million and 1,007 clients. Her disciplinary record was spotless.
But on Aug. 31, 1994, Martens cracked. In a meeting attended by 24 female sales assistants, Cuneo exhorted them to volunteer for his personal charity, Hospice Care of Long Island. They had little choice: Women who refused should not expect raises or time off for sick relatives or funerals. The women "felt threatened, angry, and helpless," one sales assistant said in a statement.
Martens saw the sales assistants, some in tears, as she headed for a similar meeting for brokers. As Cuneo went to the podium, Martens stood up and spoke out. "I have sat in these meetings for 10 years and listened to your filthy mouth," she said. She criticized him for his favoritism and ill treatment of her and other women. Cuneo, who puffed up "like a fish," says Martens, responded that she would be tossed out of the firm.
Martens then wrote to Smith Barney CEO James Dimon. She included notarized statements from other female brokers and sales assistants. Yet after Cuneo was placed on a leave of absence, male brokers loyal to Cuneo pushed her to drop her charges. Co-workers told Martens that Cuneo had threatened her as well.
Two days after Cuneo retired, the new branch manager, Glenn Fischer, a protege of Cuneo's, came into Martens' office and told her that he had been given permission to terminate her. She was given one hour to leave. She declined a suggestion to pack up her files in boxes. Instead, she took care of a few last trades, kissed her sales assistant good-bye, then carried out only her Rolodex and a plaque for 10 years of service. "I wasn't going to let them humiliate me one time further by having to go out like a shopping bag lady," Martens says. "I'm going to set an example of how we can keep our pride and dignity."
Today, Martens is a broker with A.G. Edwards & Sons Inc. in its Garden City branch. Smith Barney allowed her to keep her Smith Barney accounts and copies of her customers' records. But Martens believes that Smith Barney managers made sure branch managers of big local competitors knew of Martens' run-ins with Smith Barney. Martens says Smith Barney put a black mark on her official record. According to the complaint, her official record says she was terminated for "incompatibility with local management [unrelated to customer matters or sales practices] culminating in her refusal to attend a required meeting."
Martens and her co-plaintiffs face a long, expensive battle in taking on one of the largest firms on Wall Street. Attorneys are skeptical about the case. "It will be very hard for them to meet the legal requirements for a class action," says Jeffrey L. Liddle, an attorney who specializes in sex-discrimination suits. But even if the plaintiffs lose, their allegations did dispatch a branch manager into early retirement and could help forestall future boom-boom rooms.
PAMELA MARTENS VS. SMITH BARNEY
JANUARY, 1985: Pamela Martens is hired as broker trainee at Shearson/American Express's Garden City (N.Y.) branch on Long Island.
OCTOBER, 1994: Martens writes to James Dimon, CEO of Smith Barney, which acquired Shearson in 1993. She complains about sex discrimination and an atmosphere of "intimidation and humiliation."
JANUARY, 1995: Martens hires an attorney. When Smith Barney learns that, the firm places branch manager Nicholas Cuneo on a leave of absence.
OCTOBER, 1995: Smith Barney announces Cuneo's retirement. Two days later, Martens is terminated for failing to attend a meeting.
DECEMBER, 1995: Martens lands job as a stockbroker at A.G. Edwards' office in Garden City.
MAY, 1996: Martens, Judith P. Mione, a Smith Barney sales associate, and Roberta Thomann, a former Smith Barney sales associate, file a class action against Smith Barney and Cuneo in U.S. District Court in New York. The suit alleges sex discrimination. Smith Barney says the charges are "absurd."