Judge Approves Merrill Lynch's $160 Million Racial Bias Settlement
/After eight years of legal tussles, a federal judge today approved a record $160 million settlement in a racial bias suit against Merrill Lynch brought by black brokers. The settlement, in which Merrill denied any wrongdoing, marks the final resolution to the lengthy case brought by George McReynolds, a broker in Merrill’s Nashville office. McReynolds, as we described in a feature story last week, has continued to work at Merrill throughout the case, despite health troubles and what he describes as a “chilly” reception from co-workers.
The case was an eight-year battle over why black brokers composed fewer than 2 percent of Merrill’s full brokers and generally had smaller books of business. Merrill argued that, in essence, society was the problem—that white brokers had access to more wealth because they had larger social networks of well-to-do potential customers, who in turn were more likely to invest with brokers who are similar to themselves.
The plaintiffs claimed that whatever inequities existed in society were compounded by Merrill’s policies. They focused on two programs: how brokers formed teams to boost their books of business, and how Merrill distributed accounts from new clients and brokers who left the firm. The plaintiffs said that black brokers were less likely to be asked to join teams, which they said deprived them of a key way to get more and larger clients. They also said Merrill transferred more and better accounts to white brokers, even in the very first months of the training program for new brokers.
