Sex and the Street

By Heather Timmons


Women vs. Wall Street

By Susan Antilla

Bloomberg Press -- 342pp -- $26.95

With all the challenges faced by new Smith Barney Chief Executive Sallie L. Krawcheck, there's one she may not have thought of: the firm's reputation, earned in the 1990s, for mistreatment of women. Krawcheck, the former CEO of Sanford C. Bernstein & Co., signed on with the Citigroup (C ) subsidiary on Oct. 30. The selection of the highly respected executive is a smart move by Citi CEO Sanford I. Weill, since Smith Barney has become the focus of outrage over the cozy ties between analysts and bankers. However, as Susan Antilla's comprehensive and sharply written Tales from the Boom-Boom Room: Women vs. Wall Street reminds us, only six years have elapsed since the firm was regarded as a den of sexism.

Tales traces the story of Pamela K. Martens, a high-producing broker in the Garden City (N.Y.) office of Shearson Lehman Brothers., which merged with Smith Barney in 1994. In 1996, after 11 years of service in that branch, Martens sued Smith Barney, charging a climate of harassment and outright sexual discrimination. Yet Martens didn't win much, and the Street still struggles with discrimination.

Male colleagues were alleged to have established an Animal House atmosphere in the office--telling nasty, misogynistic jokes, referring to women as "whores," and boozing it up in the basement rec area, or "boom-boom room." Women were banned from off-site meetings such as golf outings, and if they became too successful, their clients were taken away and handed to male brokers. Finally, Martens claimed, women were systematically denied the pay and benefits enjoyed by men.

As more women from Smith Barney and other firms came forward with similar tales--and other lawsuits--the scandal trained nationwide attention on Wall Street sexism. The media breathlessly repeated tales of how male brokers had tugged at females' clothing, pawed their breasts, and displayed sexual arousal. By 1998, a fired-up New York attorney general, Dennis C. Vacco, was openly criticizing the Street's largest firms and calling for change.

But the brouhaha died down long before the court cases finished. As detailed by Antilla, a Bloomberg News columnist who covered the case for The New York Times, Smith Barney proved masterly at undercutting suits and arranging for quiet settlements. Skilled litigators ground down critics, and, according to Antilla, most of the various plaintiffs were dealt with out of court before the original goal of the suit was met: demonstrating patterns of civil-rights violations.

After an eight-month probe, Vacco named only one offender--a mid-level British brokerage. Many of the women who filed claims against employers were driven out of the business, Antilla shows. A few got small settlements, but sizable ones were rare. Many of the men who were named in the suits are still in place.

Among Martens' goals was to end the longstanding practice of requiring employees to arbitrate claims against employers privately, rather than go to court. Yet today, such clauses remain in effect at Smith Barney and elsewhere.

Studies on discrimination and harassment that were compiled as part of the plaintiffs' cases never reached the public. Antilla reports some of that research--and it is damning. According to one psychologist's survey, more than 30% of Smith Barney women were suffering from symptoms of post-traumatic stress disorder. "The rate was higher than it was in the military, for God's sake," psychologist Louise Fitzgerald told Antilla.

The author turns up some outrageous details. For example, at Olde Discount Corp., a family-owned firm that has since been bought by H&R Block (HRB ), Susan Bell was promoted to branch manager when her male boss quit. She got no raise. And although she was one of the top-earning brokers, her new duties included cleaning the toilets--something not required of her male predecessor. The book reports that the matter was settled out of court.

In Antilla's account, the plaintiffs' side doesn't always appear heroic. The lawyers handling Martens' case against Smith Barney--Linda Friedman and Mary Stowell--appear as sitting ducks for Smith Barney's heavy legal artillery. In Antilla's view, the two naively accepted promises that the firm would change. (The book contains little in the way of a response from the attorneys. According to endnotes, they stopped talking to Antilla for long stretches, and in 2001 they threatened to sue her. Calls from BusinessWeek to the attorneys were not returned.)

Smith Barney responded to Antilla's requests for interviews with a letter from its defamation counsel. The company issued this statement to BusinessWeek about the book: "We're proud of the significant strides made over the past several years to become an employer of choice, and committed to giving every employee the opportunity to achieve his or her full potential."

Since these suits were filed, women have actually lost ground on Wall Street. They have suffered disproportionately in cutbacks, and overall, the number of women in financial services has dropped by 15% in the past two years, according to the Bureau of Labor Statistics. Since 1998, the number of female assistant managers and sales managers at Smith Barney has climbed 46%. In raw figures, however, that represents only 35 of a total 349 positions. Krawcheck will have to do better.

Timmons covers banking.

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