Merrill Lynch & Co. Inc. has been accused of discriminating against African American and female brokers, a claim based on the retention bonus package that was announced to the firm’s brokers last Friday.
In a lawsuit filed the same day in federal court in Chicago, a group of brokers allege that Merrill Lynch of New York and Charlotte, N.C.- based Bank of America Inc. play favorites.
The two firms allegedly “identified and selected for higher compensation the [reps] it would try hardest to retain via the retention bonuses and knew that they were offering more generous retention packages to white men than to African Americans and women,” according to the suit, which was submitted on behalf of plaintiffs by the law firm Stowell & Friedman Ltd. of Chicago.
That law firm has pursued sexual-discrimination lawsuits and arbitration claims on behalf of hundreds of women employed at the nation's biggest securities firms, including Merrill Lynch.
George McReynolds, a Merrill broker based in Nashville, Tenn., is the lead plaintiff in the suit, which is seeking class action status.
According to records of the Financial Industry Regulatory Inc. of New York and Washington, he has been a broker with Merrill since 1983.
“Simply put, [Merrill] intended to retain white men while not retaining African Americans and women,” the lawsuit alleged.
“Further, the retention bonus for African American [advisers] and women, even those in the higher quintiles, are lower than they would have been but for intentional racial discrimination.”
The claims are bogus, said a Merrill Lynch spokesman.
“There's no merit to these claims, and we'll vigorously defend against this suit,” said Mark Herr in an e-mail.
Last month, Bank of America agreed to acquire Merrill for $50 billion in stock.
On Friday, Merrill’s 16,850 reps and advisers learned about their retention bonuses, with the top producers getting the sweetest deals.
Brokers producing more than $1.75 million in fees and commissions are in line to get a bonus equaling 100% of annual production if they sign the retention agreement by its deadline, Nov. 14.
Meanwhile, brokers producing less than $500,000 will receive incentives ranging from nothing for the lowest-producers to a deferred cash bonus of no more than 20% over three years.
For the full report, see the Nov. 3 issue of InvestmentNews.
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