The Color of Money: Black Brokers Make Wall Street Pay Up in Discrimination Lawsuit [Uptown Magazine]
George McReynolds didn’t set out to be anybody’s hero when he joined Merrill Lynch’s Nashville office in 1983 and he certainly didn’t think he would become the heart of the biggest racial employment discrimination suit in U.S. history. In fact, when he decided to change career paths, he was just trying to support his family, send his kids to college and save up for retirement, like so many other Americans.
For years McReynolds had dabbled in the stock market as a side hustle, but never attempted to pursue it full time. When his broker suggested that he leave his management training program at Sears to work in finance full time, he was apprehensive, but liked the idea of helping people build their financial lives. Soon after, he was hired at financial services firm Edward Jones where he made cold calls from a phone book. Three years later, he joined the big leagues at Merrill Lynch as a stockbroker.
At the time, Merrill Lynch was the top brokerage firm in the country generating almost $6 billion in revenue. He was one of a few African Americans in the office and, soon, McReynolds said he noticed little things and witnessed “questionable” behavior (like not being asked out to lunch) that could have been attributed to his race. But he didn’t realize that others were feeling the same way until an informal gathering of 50 black brokers met in Chicago in 1994.
A few years later, McReynolds reached his breaking point. He was asked to pool his resources with two young, white rookies. When the team was dissolved, he wanted his share of the client assets, which he said totaled about $40 million. His manager refused and gave most of the accounts to the neophytes. His complaints fell on deaf ears.
Eventually they made him give up his office due to underperformance. He was moved to a new space—a desk right outside the women’s bathroom. It was where all the newbies sat.
Merrill Lynch later claimed that any number of factors could go into the way a team was divided up, but McReynolds didn’t buy it. “I felt that I was being treated wrongly. Since I was the only black person that’d been around for that length of time, I had to feel like it was something there.”
He contacted his old friend and fellow broker Maroc Howard, whom he’d met during the meeting in Chicago, for some advice. Howard wasn’t experiencing any overt discrimination in his Dallas office, but he knew that there were issues, even if subtle, that needed to be addressed.
“[For the] typical African American, if they’re on a job [for] 10 to 20 years, making $100,000 a year, the managers will say ‘You guys are doing good, what’s your problem?’,” says Howard. Then you find out that your [white] peers are making $300,000, working less than you are and the reason there is a gap is not because you are lazy.”
Inspired by a $250 million gender discrimination suit that a group of women filed against the company in the ’90s (and eventually won in 2004), McReynolds decided to take on one of the largest corporations in America.
So he and Howard took a trip Chicago to meet with the attorneys from Stowell & Friedman, the firm that won the gender discrimination suit. Within five minutes, he knew he’d found the right group and the case was taken on contingency.
“We told them that their names would be forever linked with this lawsuit and [if there’s] anything that causes the reject letter faster, it is finding out [a candidate] sued their last employer for discrimination,” says Linda Friedman, one of the lead attorneys. McReynolds and Howard didn’t back down.
The legal team found there was not a single black broker in more than 25 states, that blacks represented fewer than two percent of their brokers nationwide (a surprise considering the firm made a pact with the Equal Employment Opportunity Commission in 1976 to increase the number) and evidence of racial discrimination, not just with the “teaming” policies of the company, but in hiring, compensation and advancement opportunities. They claimed that in 2006, the black brokers made 43 percent less than their peers.
Statistics like these shocked some workers, but not others. Frankie Ross, another plaintiff , says that it should be understood that the playing field is not even. “For us to think that people are going to reach out simply because we graduated from Howard with a 3.9 majoring in economics…It doesn’t matter to them. They don’t see us the same. It’s just part of being black in a predominantly white workforce.”
A senior vice president with the firm, who asked that her name not be used, says racial and gender discrimination started as soon as she sat down for the job interview and continued for years. She had a positive experience working on a team with a white male though; he even complained to managers about what he perceived as racial discrimination on her behalf. But she believes his vocalness eventually cost him his job.
And after he left, the company split the team’s assets among the office— giving away $25 to $30 million of what she says were her own assets. A manager apologized later, but she never got those accounts back. After hearing about the lawsuit, 15 other people were willing to sign on as named plaintiffs.
One of the people who joined the suit was Al Reynolds, who is better known these days as the ex-husband of media personality and attorney Star Jones. Reynolds, who joined the firm in 1998 and worked in the New York office, says it was “no secret” that blacks were treated different than whites at Merrill Lynch. “[Whites] were given opportunities, awarded differently, they were definitely mentored and nurtured, and were doing better.”
It became even clearer to him, he says, when he was denied access to a working group for which he claims he was qualified. McReynolds’ story inspired Reynolds to do something. “He motivated us in such a way to stand for something…that this has nothing to do with your ability to be smart, this has to do with people discriminating based solely on your race,” says Reynolds. “If we don’t stop it and eradicate it now, not only will we be the only ones in the room, we’re going to look up and we’re not even going be in the room.”
Stowell & Friedman filed the case in federal court in Illinois in 2005, charging the company with intentional and unintentional, or “disparate impact” discrimination, noting that a “racist culture” existed at the firm.
Loyola University Chicago law professor Michael J. Zimmer says cases like this are extraordinarily hard to win because the burden of proof is so high and big companies have major resources to fight back. “The courts have moved on from civil rights issues and they no longer think that race discrimination, as in employment, is that broad or that general. So they modified the law, procedurally and substantially, to make it more difficult to succeed in challenging employers as discriminators.”
A class action suit is often attractive in these types of cases, Zimmer says, because you can attack “broader-based problems,” with solutions that are wide-reaching and can change the practices of a company. But getting certified as a class is harder than ever and Friedman had to prove that there were specific policies in place nationwide that managers had to follow.
After the suit was filed, the company immediately began to make changes to the brokerages, but McReynolds says they were largely symbolic. “People didn’t want to talk to us, people didn’t want to be associated with us.” Marshell Miller wasn’t even that lucky. As soon as the lawsuit was filed, he says management in his Arkansas office forced him out in retaliation. “I had been there almost 19 years. I was hurt. I was very hurt.” He didn’t try to fight back. “If a manager treats you that way, do you really want to be there?”
However, Miller, along with McReynolds, Ross and Howard, formed a group, a brotherhood, and took the lead in spearheading the suit. They became each other’s support system. “I couldn’t talk to my family about this, I couldn’t talk to anybody that’s on the job,” Howard says. “Without those guys, I don’t know what I would have done.”
One of the most heartbreaking moments for the plaintiffs came during Stanley O’Neal’s deposition. O’Neal, who is African American, had become the CEO of Merrill Lynch, a big deal for Wall Street and Main Street, but his tenure didn’t do much for the plight of black stockbrokers. According to a partial transcript of the deposition provided to UPTOWN, he believed that African American brokers weren’t performing as well as their counterparts because they had to reach out and work with whites, particularly wealthy whites, who may not have wanted to work with blacks. “I think it is a fact of existence that reaching across cultural boundaries and racial boundaries…can be a challenge in this country,” O’Neal said.
It was the argument that many other managers made as well—that it wasn’t Merrill Lynch’s fault, but rather a ‘racist’ society at large. Howard was furious. “I was shocked and pissed off . Money is green, not black. We’re financial advisors; we’re not black financial advisors in the same way the president is the president of all of America, not [ just] black people.” The company continued to fight back against McReynolds’ charges and defend their policies, at one point saying, according to a document obtained by the Associated Press, that the brokers were all “judged by the same metric.” They said the bottom line was always, “produce more, earn more.”
In 2007, Stanley O’Neal was ousted in a controversial departure as CEO. That same year, McReynolds’ health took a turn for the worse. He had a heart attack followed by massive complications. He was in intensive care for months and took nearly a year to recover.
The case was also still having problems getting certified as a legitimate “class.” In 2010, despite years of evidence gathering, the district judge wasn’t convinced there was enough evidence for the plaintiff s, who were supervised differently across the nation, to constitute a “class,” and denied their certification request. Friedman was heartbroken.
In an interesting twist, Friedman says the plaintiffs urged her to carry on, despite all the setbacks. “I, being white, feel that justice is usually right, that we usually get there. I came to understand that African Americans really don’t see the justice system the same way. They see that it occasionally gets it right, not that it occasionally gets it wrong.”
The team held on, the unnamed female broker says, because they truly believed in the case. “I’ve been in all kinds of organizations, all kinds of groups, and you can’t hold them together that long; there’s always somebody that wants to do something. I never heard anybody talk about pulling out, walking away. That speaks to the level of discrimination. Those times when we were denied made us more resilient.”
A breakthrough came in 2011 when a group of female workers were trying to become certified as a class in a case against retail giant Wal-Mart. Their certification was denied, but in the process, the court spelled out the national policies that had to be in place for a group to be certified as a class.
Friedman immediately realized that Merrill Lynch had established such policies, ironically, after her gender discrimination suit years earlier. So she went back to the district judge. He denied her claim but urged her to appeal the ruling because of the change in the law. Using an argument that compared the teaming policy to police departments that wouldn’t let women in, because, she says, folks sometimes understand gender better than race, the group was finally certified as a class by an appellate court.
Shortly after, in August of 2013, a settlement from Merrill Lynch, which had been acquired by Bank of America, came down, awarding the plaintiffs $160 million as well as an agreement to establish stricter requirements for attaining and retaining African American brokers. It was the largest settlement for a racial employment discrimination suit in U.S. history. The company didn’t admit to any wrongdoing, or acknowledge that discrimination took place, but says the agreement is a good step for all parties. “This is a very positive resolution of a lawsuit filed in 2005. These new initiatives, developed in partnership with African American financial advisors and their legal team, will enhance opportunities for financial advisors in the future,” says Merrill Lynch representative Bill Halldin in a statement to UPTOWN.
Halldin says the company will: provide coaches to work with African Americans, create a leadership council that will monitor the company’s progress, establish a nationalized peer mentoring program, implement new guidelines for managers with measures to insure they’re promoting diversity, and boost contributions to their “Diversity Fund.”
The folks involved in the class action suit, whose numbers ballooned to almost 1,400, should begin to see their checks in the mail this spring, much needed relief for those who lost their jobs and careers trying to work for Merrill Lynch. Almost nine years later, the plaintiff s and their legal team are overjoyed. A few, like McReynolds, still work at Merrill Lynch, some have found jobs at different financial firms, and others like Miller, who says the case “cost me my career,” are still struggling to find work.
McReynolds, who is turning 70 this year, is thinking about retiring in the next few years. He doesn’t see any changes yet, but will serve as a monitor to make sure Merrill Lynch keeps its word.
“While we didn’t go to trial, we have a settlement that said they did something. Even though on paper it says that they did not do anything. I don’t think they would have paid out that kind of money unless there was something there,” says McReynolds. “I feel like I’ve done what I can do. Hopefully at this point, I can get some other people to pick up the mantle and continue.”