Fed Up -- And Fighting Back

After years of discrimination,women on Wall Street are turning up the heat

When Anne P. Kaspar, a veteran financial adviser, joined Morgan Stanley's (MWD ) office in Santa Fe, N.M., in August, 2003, the scene felt all too familiar to her. The former plaintiff in a sexual discrimination class action brought against Merrill Lynch in 1997 thought she was going to give investment advice as soon as she renewed her broker's license. Instead, Morgan Stanley sent Kaspar to a three-year training program with a bunch of rookies, and Kaspar alleges her boss forbade her from cultivating clients even after she had secured her license, unlike less seasoned male colleagues.

Instead of suffering in silence for years, Kaspar complained to her boss about unfair treatment just four months later. By May, Morgan Stanley fired her for "insubordination." Kaspar filed a sexual discrimination claim with the U.S. Equal Employment Opportunity Commission in which she said there are enough women in Morgan Stanley's retail-brokerage operations who are experiencing discrimination to form a class action, according to documents reviewed by BusinessWeek.

Morgan Stanley says Kaspar was hired as a trainee, the job she applied for and that she was not disadvantaged relative to her male colleagues. She was "not qualified to work as a financial adviser" since she had not been registered for five years and had never been through a formal training program. The EEOC, which struck a $54 million settlement with Morgan Stanley in July for allegedly discriminating against hundreds of women in its equity business, declined to comment.

Kaspar's battle with Morgan Stanley illustrates a new, more aggressive phase in the battle for women's equality on Wall Street. Frustrated by a lack of progress in an industry still dominated by men, women are fighting on several fronts. They are filing a rash of new lawsuits, some of which should make their way to courts this fall. Others are lobbying internally for change. A third camp is deserting the business altogether. "When I started on the Street, firms could bash your head in and you'd stay. Now many women are saying, 'see ya,"' says Janet Hanson, who left Goldman, Sachs & Co. (GS ) to found her own money-management firm in 1994 and joined Lehman Brothers Inc. (LEH ) in May as a managing director hired specifically to help recruit and retain women.

Arguably, women have made progress in recent years, although their clout is still less than in many other industries. Since 1976, when the EEOC settled its first sex discrimination class action against a Wall Street firm, Merrill Lynch, the percentage of the firm's brokers who are women has more than tripled -- but they account for only 15% of the total. And only 10.6% of Wall Street's corporate officers are women, vs. 15.7% for other industries on average.


Worse, despite years of legal battles and bad publicity, some firms' cultures apparently still tolerate sexual pranks. A presentation book shown as a joke to client GMAC Mortgage Corp. last fall by Deutsche Bank Securities Inc. employees contained lewd biographies of male and female investment-banking-team members. It described the one female on the team, who is still at the firm, as a "legend of the adult film industry under her stage name Roxy Lovejoy" and as a second-rate porn star in a film named "Plump Fiction." The bios came to light after a former Deutsche Bank employee filed a religious discrimination lawsuit in New York State Supreme Court on Sept. 7 about the prank. Both Deutsche Bank and GMAC Mortgage declined comment.

Men and women on Wall Street don't even agree that there's a problem. While 65% of women on the Street believe they have to work harder than men to get the same rewards, only 13% of men share their opinion, according to a recent study by research organization Catalyst Inc. Even fewer men -- just 8% -- concur with the 51% of women who say they're paid less than men for doing similar work.

A slew of sex discrimination cases are working their way through the system. Until now most women have settled their cases for chump change, leaving their stories untold and questions unanswered. But stalwart claimant Nancy Thomas, who has insisted on a hearing ever since filing her claim as part of the class action against Merrill Lynch, is expected to testify that someone left a dildo, lubricating cream, and debasing poems on her desk. Merrill says it diligently investigated the incident and was unable to identify the offender.

Women are also increasingly exposing -- or finding ways to get around -- practices that they say have hurt their cases. Former Morgan Stanley broker Elizabeth "Lisa" Neuman, who worked in Somerville, N.J., plans to appeal the summary judgment by a federal court that dismissed her sex discrimination claims. She is also suing the firm for allegedly breaching its employment agreement with her. Morgan Stanley believes the case has no merit.

BusinessWeek has learned that Pamela K. Martens, lead plaintiff in the landmark 1996 class action against Smith Barney, has asked the state presidents of the National Organization for Women to investigate the role that former President Patricia Ireland had in the Smith Barney and Merrill Lynch class actions. Martens claims that Ireland asked women at Merrill, some of whom were plaintiffs, to share their complaints and suggestions for improving the firm without disclosing if she was working for Merrill. BusinessWeek reviewed e-mails from Ireland to the women and they did not reveal the Merrill connection, though Merrill and Ireland say the women were informed of her role.

Women who are not filing lawsuits, especially those who have risen in the ranks, are waging a battle from a different perspective. At J.P. Morgan Chase & Co. (JPM ), Chief Financial Officer Dina Dublon, as a member of the senior management team, has a say in how many women are promoted at each level of the organization as well as whether they are being considered as candidates for job openings. On another front, women are trying to persuade the banks to adopt more flexible employment policies, such as job sharing even on trading floors and allowing them to work one day a week from home.


Other women are just leaving. According to the Securities Industry Assn., the percentage of women on Wall Street overall has declined to 37% in 2003, vs. 41% in 2001. And the percentage in executive management positions fell to 17% in 2003, vs. 21% in 2001. "Many of my friends dropped out because Wall Street was unwilling to provide a career path that incorporated the reality of family needs," says Deborah C. Wright, chief executive of Carver Bancorp (CNY ), who worked at First Boston (CSR ) in the 1980s.

What's particularly worrisome is that more women are leaving the Street long before they actually have families. "A fair number of women look ahead and say 'man, this is never going to work,"'says Katie Higgins Hood, 30, director of research programs at the Michael J. Fox Foundation for Parkinson's Research and a former Goldman Sachs analyst.

If current trends continue, Wall Street may become even more of a man's world than it was in the 1970s. "Women have gained no ground on Wall Street in the past eight years," Kaspar fumed in capital letters and bold type in her affidavit to the EEOC in May, before firing off an open letter to Morgan Stanley CEO Philip J. Purcell and the firm's board of directors in August. Purcell has not responded. The firm maintains that it dealt with the issues through its attorneys before the letter was sent.

By Emily Thornton, with Mara Der Hovanesian and Jennifer Merritt, in New York

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