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George McReynolds became a broker at Merrill Lynch in 1983. He was 38 years old and excited about his new career. But it soon became obvious to McReynolds that the few black brokers at Merrill were not doing well at the firm — the third largest on Wall Street.
McReynolds says he and the other black brokers were consistently shut out from gaining access to lucrative accounts and were often forced to give up the successful accounts they already had.
“The African-American brokers got few very if any of the good accounts — we were always given the accounts that other people didn’t want,” McReynolds told Here & Now. “We were treated like second class citizens.”
In 2005, McReynolds initiated a class action lawsuit on behalf of 700 black brokers against Merrill Lynch, which was bought by Bank of America in 2008.
Last week, after eight years in court, the firm agreed to settle for $160 million, making it the largest payout in a discrimination lawsuit against an American employer.
JEREMY HOBSON, HOST:
It's HERE AND NOW, and there are few industries that have traditionally been harder for African-Americans to get into and rise up in than the financial industry. Even though blacks account for about 13 percent of the U.S. population, they held just 2.8 percent of senior positions at financial services companies at last check, according to a 2008 government report, which makes it all the more impressive that after eight years, Merrill Lynch has settled a class action lawsuit alleging widespread discrimination against black employees.
The lead plaintiff in the case is George McReynolds, who became a broker at Merrill in 1983. In 2005, McReynolds initiated a class action suit against Merrill Lynch, which was bought by Bank of America in 2008. And last week the firm agreed to settle for $160 million, making it the largest payout in a discrimination lawsuit against an American employer.
George McReynolds joins us now from WBEZ in Chicago, as does one of the suit's lawyers, George Robot, who is a partner at firm Stowell and Friedman. Welcome to both of you.
GEORGE MCREYNOLDS: Good morning.
GEORGE ROBOT: Good morning, thanks for having us.
HOBSON: Well, take us back to the beginning, George McReynolds. You became a broker at Merrill in 1983. You were 38 years old. When did you start noticing that black brokers were being treated differently at Merrill Lynch?
MCREYNOLDS: Well, one of the things that you could tell, as far as the African-American brokers at Merrill Lynch, when people were hired, there were always a lot of people being hired, but in my case, I was hired. I was the only African-American broker in the Nashville, Tennessee, area and only one of two as far as I can remember in the state of Tennessee.
For a while there, and this went on all the way up until the late '90s, we did eventually have a couple more African-Americans to come in, but what would happen was we were limited, at least it seemed that way, to a fixed number, and that was three for our area. And you always could tell. When one was fired, someone else was hired. But we could never seem to be able to get above that three number.
HOBSON: So it was just about hiring that was concerning you?
MCREYNOLDS: It was not just hiring. There was - in some cases, as people built their business, other people leave, retire or whatever, and accounts were distributed. And it seems like the African-American brokers got very few, if any, of the good accounts. We were always given the accounts that other people didn't want. We were treated as second-class citizens on that book.
HOBSON: And all the time that you were bringing this case through the courts, you stayed at Merrill Lynch. Why is that?
MCREYNOLDS: I'm stubborn. I wanted to see this thing end. And as you said, I was 38 when I joined Merrill. The suit came in 2005. I really didn't see any reason to go anywhere else. If I was going to make the changes or help the people make the changes - that was part of the reason why I brought the lawsuit, I needed to be there to see it through, and I wasn't going to leave.
HOBSON: And it did not look, George Robot, like an easy road at any point. It made it all the way to the Supreme Court twice. But it just didn't look good. Did you think that this was winnable, or did you think that you were going to lose?
ROBOT: Well, we always believed very passionately in the cause. I mean, the firm has been dealing with cases like this, and this is one that just resonated with us. We knew the numbers were - the under-representation of African-Americans needed to be addressed. We knew that the treatment of African-Americans needed to be addressed. And we knew that if we just had the right audience, someone would agree with us.
Unfortunately because of - the law is a dynamic thing, and getting a class action certified these days is no easy task. It took us a lot longer than anyone anticipated. But we did get the right person, the former Judge Posner in the 7th Circuit, and it turned things around for us in a way that we always believed we would have.
HOBSON: Well, tell us about, I think, it looks like a very key moment for you, which was a decision by the Supreme Court against female employees of Wal-Mart who had tried to sue Wal-Mart for sex discrimination as a large class. They failed. How did that help you?
ROBOT: Well, that was an unfortunate case, but it really marked the culmination of a lot of the years of narrowing of the law. Essentially the Supreme Court, that was in some ways just an extreme example because there were a million and a half women in that proposed class and thousands of employment locations. And the policy that they were challenging was Wal-Mart's allowance of individual store managers to make decisions on hiring, employment and promotions.
And the Supreme Court said that is not the type of policy that was contemplated under the federal rule covering class actions and that it needed to be a written, objective policy that on its face had no discriminatory language but could be tied to disparities in treatment and compensation, which is exactly what we had.
So with that decision in hand, we went back to the judge, asked him to reconsider based on the fact that we had two policies, specifically those related to teaming and redistribution of accounts, that were squarely on point with those delineated by the Supreme Court in denying the Wal-Mart decision.
Our judge still disagreed, but at that point the issue was controversial enough where he did allow us to take an appeal before the 7th Circuit, and the 7th Circuit found that our policies were in fact exactly those contemplated by the Supreme Court.
HOBSON: Well, George McReynolds, here we are eight years later, hundreds of black brokers are going to get paid out from this settlement. Merrill Lynch says in a statement this is a very positive resolution of a lawsuit filed in 2005 and will enhance opportunities for African-American financial advisors.
But I did notice that there are a number of states that still don't have any black brokers at Merrill Lynch. Do you think change has come? Is it coming? What do you think?
MCREYNOLDS: Yes, I do hope change will come, and I do believe change will come. I think with our - the steering committee and with the work of the company, and it's going to take all of us working together in order to make it work, I think we can get the numbers in to the states in which there are no African-American brokers at this point. It's just a matter of all of us working together.
HOBSON: How are you feeling today?
MCREYNOLDS: I feel great. It's great. It's great to get up in the morning to know that the fight is almost through. As soon as we can get the final decision from the judge approving the settlement, then that portion of the fight is over with. And then we get to go forward to making the changes that I would like to see within the company.
HOBSON: Well, George McReynolds, lead plaintiff in a class action discrimination suit against Merrill Lynch and still a broker at Merrill Lynch; and also George Robot, his lawyer, a partner at Stowell & Friedman in Chicago. Thank you so much, both of you, for joining us.
MCREYNOLDS: Thank you very much.
ROBOT: Thank you.
HOBSON: And speaking of overcoming odds, Diana Nyad spoke to the media today in Key West after her 110-mile swim from Cuba to Florida. She was the first swimmer to do that without a shark cage. She is 64, appeared refreshed, pretty tan or burned, lips swollen, though, apparently because of the saltwater and the mask she had to use to keep the box jellyfish away. The latest news is next, HERE AND NOW. Transcript provided by NPR, Copyright NPR.