Tag Archives: Arbitration

Decades After ‘Boom-Boom Room’ Suit, Bias Persists for Women

Twenty-three women sued Smith Barney for sexual harassment and pay discrimination in an explosive class-action lawsuit filed 20 years ago this month. It became known as the “boom-boom room” suit, named after a basement party room at Smith Barney’s branch office in Garden City, N.Y. Nearly 2,000 women joined the case, exposing the sordid antics of Wall Street’s testosterone-driven culture.

Smith Barney paid $150 million in arbitration awards and settlements in the case, and it and other Wall Street firms rushed to set up anti-harassment training, employee hotlines and programs to recruit women.

Twenty years later, permanent change is less obvious.

“You may no longer have strippers coming for afternoon entertainment, but that doesn’t mean you are treated as an equal,” said Anne C. Vladeck of the New York employment law firm Vladeck, Raskin & Clark. “It’s not quite as blatant as what went on in the boom-boom room, but it’s still there in a way that makes it very hard for women to succeed. Companies on Wall Street are just not changing.”

You can read the full story I wrote for The New York Times here.

Fat Cats, Here’s Your Shot at Fame: 2015’s Most Shameful Award-Winners

Business this year often came out a winner at the public’s expense. But that isn’t all bad, because it gives us an excuse to pause and recognize the dubious accomplishments of the victors.

We begin with the winner of the Whiner’s Award: J.P. Morgan CEO Jamie Dimon is  the man who can’t complain enough about how hard it is to put up with regulations after his company breaks the law.

You can read about Dimon and the other winners of this year’s “Most Shameful” awards in my column today for TheStreet.

Lost money in the market? Wall Street says it’s your fault

Check out your securities firm’s pitch in TV and print ads or on its web site. Chance are your broker has painted a picture of a paternalistic organization that’s devoted to doing the best thing for you and your portfolio over a period of many years.

But don’t count on that if you wind up facing them across the table at securities arbitration — your only choice in an industry that won’t open an account unless you agree to give up your right to sue in court. Lose money after broken promises that a product is safe or that a broker will be watching over your account, and you may quickly learn that all those assurances were nothing but fluff.

In my column today for TheStreet, I talk about the ways in which Wall Street tries to wiggle out of its responsibilities to its customers, arguing among other things that customers are the ones obliged to monitor their accounts. You can read it here.

Former Morgan Stanley Broker Sues Over Arbitration Policy

A former broker at Morgan Stanley has filed a class-action race-discrimination complaint against the company, accusing it of making “an end-run around the civil rights laws” with a new policy that bars employee participation in class actions and forces civil rights claims into private arbitration.

Kathy Frazier said in her complaint that African-Americans were underrepresented in the ranks of brokers at Morgan Stanley and were paid “substantially less” than their counterparts.

Ms. Frazier previously worked at Goldman Sachs and Merrill Lynch and has an economics degree from Amherst College and a master’s degree in business administration from the University of Pennsylvania’s Wharton School of Business. I wrote about Morgan Stanley’s new policy for The New York Times DealBook. You can read the story here.

Indicted Lawyers, Peeping Toms, Can Wind Up Judges in Finra Arbitration

Finra arbitration is often a surprise to investors — not least of all because so many Wall Street customers have no idea that they sign away their right to court when they open an account.

But how about the surprise of learning that one of your arbitrators had been indicted? Or that he had said he was a lawyer, but wasn’t?

My June 24 column for TheStreet tells about Finra’s latest surprise arbitrator — the guy who was arrested for being a Peeping Tom. Really. You can read it here.

Like Anita Hill vs. Clarence Thomas, Ellen Pao Lost Kleiner Perkins Gender Fight But Women Gained

Sometimes, even a loss can be a win.

A San Francisco jury said last month that Kleiner Perkins Caufield & Byers did not discriminate or retaliate against its former junior partner, Ellen Pao. From my column for TheStreet.com:

The four-week trial had received intense media coverage for its allegations of porn-star talk in business settings and exclusion of women from company events. Rather than invite a woman on a company ski trip, “Why don’t we punt on her and find 2 guys who are awesome?” a Kleiner partner suggested in an email.

Pao lost. But women didn’t. The case brought huge attention to workplace issues that rarely get aired. Most employers require employees to agree to give up their right to sue before they even show up for the first day of work. So-called “mandatory arbitration” agreements keep gender discrimination complaints out of the public eye, and leave violators of our discrimination laws unaccountable.

You can read my column here.

Wall Street Waging War Against Making Brokers Accountable to Investors

Securities and Exchange Commission Chair Mary Jo White told members of the House Financial Services Committee yesterday that there would be “many challenges” in changing the rules so that stock brokers and investment advisers are similarly regulated.

That’s an understatement. Wall Street has been on a tear for years fighting efforts to demand more of stock brokers. From my column yesterday for TheStreet:

As things stand today, brokers need only sell “suitable” investments that match a client’s investment profile. But they needn’t act as fiduciaries who are duty-bound to put clients’ interests ahead of their own, as investment advisers are expected to do.

You might think it’s a no-brainer that people doing essentially the same job in the financial industry should be subject to the same rules, but you’d be thinking wrong.

There are two fights going on related to the duties of investment advisers and brokers. There’s the one Ms. White has a say in: Changing the rules so that brokers and advisers both are expected to put their clients’ interest ahead of their own — a so-called “fiduciary duty.” And there’s another related to retirement money. The Department of Labor would like to raise the standards for people giving advice in that arena, too. President Barack Obama publicly supported the idea on Feb. 23.

The unsightly battle that has Wall Street fighting to avoid a more ethical approach to its customers is the latest reminder of the gap between the way the industry portrays itself in its marketing, and the way it actually treats its customers. From my column:

“These guys advertise like doctors and lawyers and litigate like used car salesman,” said Joseph C. Peiffer, president of the Public Investors Arbitration Bar Association, or Piaba, a group of lawyers who represent investors in securities arbitration.

You can read the story here.