Bank of America Corp. was accused in a Manhattan federal lawsuit of discriminating against female brokers at the former Merrill Lynch & Co. by offering them lower retention bonuses than male counterparts.
Thursday’s lawsuit seeks class-action status, and contends that female brokers were typically eligible for lower bonuses because of gender bias at Merrill, including the brokerage’s practice of steering wealthier clients to male brokers.
Because bonuses were based on “production,” or fees earned on client assets, the bonus distribution authorized by Bank of America “disproportionately disadvantages women and advantages white men as favored employees,” the complaint said.
Retention bonuses are often awarded to brokers who work at companies being acquired to keep them from defecting, and for top producers can reach seven figures.
Bank of America has said it has about 15,800 brokers, most of whom came from Merrill. Chief Executive Kenneth Lewis has called the brokerage business the “crown jewel” of Merrill. The bank bought Merrill on Jan. 1.
“The idea of a retention bonus is to retain the best and the brightest,” said Linda Friedman, a partner at Stowell & Friedman Ltd in Chicago representing the plaintiff.
“Bank of America acquired a company that had a history of mistreatment,” she went on. “Rather than acknowledge that, and be part of the solution to level the playing field, Bank of America picked up where Merrill Lynch left off.”
A bank spokeswoman, Shirley Norton, said Bank of America will vigorously defend against the lawsuit.
“The adviser transition program was merit-based and implemented fairly and equally for men and women,” she said. “We do not tolerate discrimination.”
The case was brought by Jaime Goodman, who according to the complaint has worked at Merrill since 1992. It said she has been a top-quintile performer and “a $1 million producer for nearly a decade,” but would have performed even better and gotten a higher retention bonus absent discrimination.
Goodman is seeking compensatory damages including the value of all compensation and benefits lost because of the alleged bias, as well as punitive damages and other remedies.
Last year, Citigroup Inc agreed to pay $33 million to settle similar charges in a federal lawsuit in San Francisco brought by about 2,500 female brokers at its Smith Barney unit.
Bank of America and Merrill had separately faced other bias lawsuits accusing them of steering business to white workers. Friedman is still pursuing a 2005 federal lawsuit against Merrill in Chicago on behalf of African-American brokers.
(Reporting by Elinor Comlay and Jonathan Stempel; Editing by Bernard Orr and Gerald E. McCormick)
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