The noise undoubtedly has reverberated up and down Wall Street, if not throughout the country, after a $54 million settlement was reached yesterday in Manhattan, just before trial was to start. For a class of female employees of Morgan Stanley, this settlement may never be enough to compensate them for their earning potential before they took on one of Wall Street’s venerable trading firms. But it’s certainly large enough for other companies to take notice, and coupled with several other similar lawsuits in the past few years, hopefully enough to really start changing the culture for women on Wall Street.

Just minutes before a jury of eight women and four men was assembled in a Manhattan courtroom to hear opening arguments in the case of EEOC v. Morgan Stanley (01 CV 8421, Southern District of New York), U.S. District Judge Richard M. Berman made the announcement. After an intense weekend of negotiations, involving those at the very top (the chief executive of Morgan Stanley, Philip Purcell and the chairwoman of the EEOC, Cari M. Dominguez), a settlement had been reached, averting a trial which could have been risky for all of those involved.

Although the EEOC was trying this case on behalf of a class of women in Morgan Stanley’s institutional equities division, it was Allison K. Schieffelin who led the way. As one reporter pointed out, “The former institutional sales executive is not just any woman looking for a place in the securities business. She had a place but wanted a better one, a slot as a managing director, which is reserved for the top 2% at a firm like Morgan Stanley.” Schieffelin joined Morgan Stanley in 1986, after she received her MBA. Her lawyer, Wayne Outten (one of the cofounders of Workplace Fairness) describes her as “the ‘archetypal Morgan Stanley person’ who made the firm the highest priority in her life.” (See Newsday article.)

For ten years, Schieffelin was a star performer in the Convertible Department, receiving promotions first to Vice President and then to Principal. She was an extraordinarily successful sales person and also won high praise for her training of other employees. Her next goal was a promotion to the Managing Director position–a goal that very few ever attain. She first became eligible for promotion in 1996, but at the end of that year, some men who were not as qualified as Schieffelin were selected and she was not. (See Schieffelin complaint.) The same thing happened in 1997. In mid-1998, Schieffelin asked her immediate supervisor, Frank Platt, if she was on the promotion list for 1998. Platt responded “no.” Schieffelin asked if she was ever going to be promoted, to which Platt’s response was “not that I can see.” When she asked why, he said “not everyone gets Managing Director.” Of 50 Managing Directors in Schieffelin’s division, only 3 were women, and they were believed to be among the least powerful and lowest compensated managing directors in the division. As a result of being denied this promotion, Schieffelin filed a discrimination complaint with the EEOC in November 1998.

On a day-to-day basis, Schieffelin encountered discrimination typical of what other women have experienced in the workplace, and especially on Wall Street. (In the last several years, both Smith Barney and Merrill Lynch faced similar high-profile lawsuits based on discrimination against female employees. See New York Times and Bloomberg articles.) In order to succeed in a high-pressure sales environment, aggressive tactics are necessary, yet a double standard exists. (See Newsday article.) Schieffelin was told that she was “snippy” and “too emotional,” while her male colleagues who acted similarly were praised for being “aggressive” and “competitive.” She was told that she was “too focused on her work” and that she should direct her energy towards “more important things” such as “having a family.” She was excluded from social events and client meetings key to building relationships with her clients. Despite her avid interest and competency in golf, she was never allowed to attend an important golfing event held by her department each year at a golf resort in Florida, as it was known to be a “men’s only” event. She was excluded from one event in Las Vegas involving her clients so that those attending would feel more comfortable in participating in sexually-oriented entertainment activity, and on more than one occasion, was left out from meetings so that her male colleagues and clients could go to strip clubs. (See Schieffelin complaint. Note: This case settled without Morgan Stanley admitting liability, so the allegations from her complaint remain exactly that, allegations. As noted by the judge in the case, “The court is not ruling on the merits of any party’s allegations.” See New York Times article.)

After filing her discrimination complaint, the environment for Schieffelin intensified at Morgan Stanley. The firm diminished her role in training other employees, and withheld access to important information affecting her work and her clients. She didn’t receive the same level of support for executing trades as in the past, resulting in less attractive deals for her clients. She was accused of placing the firm at a “competitive disadvantage” because of the EEOC charges she filed. She was blamed for mistakes that she had not made, and her clients were told that she had committed errors. Her reviews, excellent before making waves, became much more negative, and her compensation declined. She was ultimately terminated, after a verbal exchange with another female colleague who had previously acknowledged that the reason she had been promoted to Managing Director was because Schieffelin had complained of gender discrimination after failing to be promoted. She was terminated without notice and escorted out of the building immediately, on the basis that she was “verbally abusive and insubordinate.”

On the basis of Schieffelin’s complaint, the EEOC investigated her claims of discrimination and retaliation, and ultimately decided to file a lawsuit on behalf of a larger class of women who suffered discrimination at Morgan Stanley. The case was filed on September 10, 2001, just a day prior to the tragedy which would so tragically affect the financial services industry and devastate the EEOC offices handling the case. While the EEOC is allowed to proceed in court against securities firms, some employees have been stymied in the past by rules binding all employees of securities firms which force claims to be arbitrated. In this case, however, Schieffelin was allowed to bring her claims individually, as a 1998 case and subsequent moves by the New York Stock Exchange reduced the amount of discrimination claims that would be subject to arbitration. (See Forbes article.)

Schieffelin chose to intervene in the EEOC lawsuit rather than going it alone, because she “wanted to have an impact.” She was slated to be its star witness at trial. The settlement that was reached not only provides financial relief for Schieffelin, but also for other women at Morgan Stanley. Notably, it also provides training and monitoring, in an effort to change the corporate culture so that others do not have to go through what Schieffelin endured. (See Consent Decree in EEOC v. Morgan Stanley.) Under the agreement reached, $40 million will be deposited into a claim fund for female employees, with each woman’s claims to be decided by a special master (retired federal judge Abner J. Mikva). Schieffelin will receive $12 million in damages from her termination, but will also be allowed to make a claim against the fund for damages resulting from her failure to be promoted and other discrimination she suffered while still on the job. Two million will be spent on diversity and antidiscrimination training at Morgan Stanley. (See Newsday article.)

While as Schieffelin’s attorney Wayne Outten told Workplace Fairness, “It is a great victory for my client, for the EEOC, and for women on Wall Street,” what is its ultimate impact likely to be? Will women be able to penetrate the upper echelons of Wall Street any time soon? The current statistics are grim: Though women accounted for 37 percent of employees in the securities industry in 2003, at the highest management level–executive management–their numbers dropped to 17 percent in 2003 from 21 percent in 2001. On the lower management levels they held just 12 percent of the branch office management positions, vs. 88 percent for men. That was unchanged from 2001. (See Newsday article.)

The amount of the settlement alone, while a mere pittance for Morgan Stanley to pay (it’s four days of profit and less than one day of revenue, according to one calculation) should be enough for other firms to sit up and take notice. (See Forbes article.) As noted by Judith Lichtman of the National Partnership, “This very large settlement will go a very long way to providing a wake-up call to the industry at large, that they better take a very close look at their business practices.” (See Newsday article.) A broker at Merrill Lynch, Hydie Sumner, who had her own case against that firm remarked, “That settlement sends a big statement that maybe she was a troublemaker, but her claim must have had merit or they wouldn’t have paid so much.” (See New York Times.)

The non-financial impact of the settlement, in the form of diversity training and monitoring, may even have more of a day-to-day impact on the culture of Morgan Stanley, and at other firms, if the strategy is adopted in an effort to forestall future claims. “This is not a short-term fix. It’s a three-year commitment with monitors and an ombudsperson.” said Manhattan attorney and NELA member Pearl Zuchlewski. Because the settlement document is public, “It is a road map for firms to look to if they want to try to ensure that they are doing everything they can reasonably do to retain and recruit women.” (See Newsday article.) For firms hoping to avoid this kind of litigation, Chicago attorney Mary Stowell, who brought the Merrill Lynch and Smith Barney cases, advises, “What they need to do instead of believing what they want to believe is take a look at the data [comparing the number of male and female employees in higher-level positions.]” Otherwise, she added, “They don’t see the big picture and they don’t know what kind of stereotypes they are harboring about what women could and should do.” (See New York Times article.)

While Schieffelin is now limited in what she can say publicly about the case, she was able to say, “I am so happy that there is a great settlement that’s good for everybody.” (See New York Times article.) Her sister says that “Had they been dealing with someone with a weaker stomach — with less balls — they would have won by outlasting that person. She just did not give up.” (See New York Post article.) We applaud her courage and that of her attorneys, and that of all the women on Wall Street who have taken on the “old boys club.”

As noted by one attorney, “To bring an entire industry into compliance will take some time.” (See Christian Science Monitor article.) However, by now, Wall Street should be hearing the loud noise of that tinkling glass, as the glass ceiling starts to come down and the victory toasts abound. And perhaps it’s so loud that it will be heard in other places, such as Bentonville, Arkansas (the corporate headquarters of Wal-Mart), as well.