6/6/2006
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NEW YORK (Reuters)—Merrill Lynch & Co. on Tuesday said settlement talks have broken down in a lawsuit accusing the largest U.S. full-service brokerage of discriminating against African-American brokers.
The lawsuit, which was filed last November in federal court in Chicago and seeks class-action status, accused New York-based Merrill of systematically discriminating against African-American brokers in hiring, promotion and compensation.
"I am both saddened and disappointed to confirm that we have reached an impasse," said Robert McCann, president of Merrill Lynch's global private client group, in an e-mailed statement.
The company offered the plaintiffs a "fair and appropriate" financial settlement, but the sides remain "far apart," Mr. McCann said.
In an internal memo, McCann separately announced the creation of an Office of Diversity, at the suggestion of some African-American brokers.
The lawsuit accused Merrill of such practices as steering African-Americans into clerical positions, diverting accounts to white brokers and creating a hostile work environment.
It was originally filed on behalf of George McReynolds, a financial advisor who joined Merrill in 1983 and was employed in a Nashville, Tenn., branch. The lawsuit seeks compensatory and punitive damages. A status hearing is set for June 21.
"Based on what has happened to date, our clients are through talking to Merrill Lynch," said Mary Stowell, a partner at Stowell & Friedman Ltd. in Chicago who represents Mr. McReynolds, in an interview.
The breakdown in talks, which have lasted hundreds of hours, "tells us that Merrill Lynch doesn't appreciate the extent of the damage that its discriminatory policies and practices have inflicted," she said. Ms. Stowell said more than 100 current and former Merrill African-American brokers and trainees have contacted her firm in connection with the lawsuit.
Merrill's diversity office will design and develop diversity programs, monitor progress and oversee employee disputes. It will be led by managing director Colbert Narcisse.
Ms. Stowell said more may be needed. "Merrill needs judicial oversight to make sure that its stated commitment to diversity is achieved," she said.
Linda Friedman, who also represents Mr. McReynolds and whose firm has brought other cases against Merrill, in January told Reuters that Merrill's willingness to discuss discrimination claims was a step forward for a company that once reflexively denied them.
In the late 1990s, Merrill agreed to pay more than $100 million to resolve claims of sexual discrimination by more than 900 female brokers.