Updated from 2:18 p.m. EDT
reached an 11th-hour settlement of a high-profile sexual-discrimination suit Monday, agreeing to divide $54 million among the lead plaintiff and various other constituents and avoid what promised to be an ugly few weeks in the public spotlight.
The settlement between the brokerage and the federal Equal Employment Opportunity Commission was announced just as opening statements were set to begin in a federal courtroom in Manhattan. The agreement came after a weekend of feverish negotiations.
The case's lead plaintiff, former bond trader Allison Schieffelin, will get $12 million of the settlement amount. Former Federal Judge Abner Mikva has been named as a special master to evaluate claims submitted by other current and former female employees of Morgan Stanley and will decide how much each person should receive.
In settling with the EEOC, Morgan Stanley did not admit to any wrongdoing but agreed to hire an internal ombudsman to oversee its practices. The firm will use $2 million of the settlement money to establish a program to enhance promotional opportunities for women employees.
In a joint press release, EEOC Chair Cari M. Dominguez, said, "Morgan Stanley has taken an important leadership step in adopting progressive programs to promote diversity that should serve as a model for the financial services industry." The firm, meanwhile, said it looks forward to working with the EEOC but "contends that it has, at all times, treated its women employees fairly and equitably."
Shares of Morgan Stanley were trading higher after the settlement was announced. The stock, going into the close of trading, was up 41 cents to $50.41.
EEOC attorney Elizabeth Grossman said the process of resolving claims will be relatively quick and won't involve any actual testimony or hearing. Judge Mikva will decide the merits of the claims based on the written submissions of the parties. The agency hopes the judge can complete his work by the end of the year.
The firm, as part of the agreement, also will have to conduct special sessions to train managers about being sensitive to sexual harassment issues.
The settlement with Morgan Stanley is reminiscent of an earlier sexual harassment suit brought against
Salomon Smith Barney
, now a part of
In that 1997 landmark agreement, the investment bank agreed to a lengthy arbitration process to resolve claims of sex discrimination. The Smith Barney case arose from allegations of sexual harassment in a basement area of a Garden City, N.Y., brokerage office that workers referred to as the "boom boom room.''
The Wall Street Journal
reported last week that Smith Barney has paid out nearly $100 million to nearly 2,000 women in that case.
The Morgan Stanley case dates back to 2000, when Schieffelin was fired after complaining about being passed over for a promotion. In a complaint with the EEOC, she claimed that Morgan Stanley systematically denied women promotions while male workers got away with serial bad behavior that included taking customers to strip clubs.
More than 300 women were represented in the suit, which was filed by the EEOC on Sept. 10, 2001. The group of women all worked at Morgan Stanley since 1995. The brokerage had previously denied any wrongdoing.
In a statement, Schieffelin said, "I am happy that this case has been settled to the satisfaction of all the parties."