Marilyn Booker, former chief diversity officer at Morgan Stanley, filed to dismiss her case last week, after previously accusing the wirehouse of systemic racial and gender discrimination.
This filing in the Eastern District of New York likely means there was a settlement between plaintiff Booker and New York-based Morgan Stanley. But little of the settlement is publicly known.
Bloomberg News
Morgan Stanley probably required Booker to sign a nondisclosure agreement, all but assuring more details of Booker’s allegations are kept from the public and other employees, according to Suzanne Bish, a partner at Stowell & Friedman, which specializes in civil rights cases concerning workers and is representing plaintiffs in a similar class-action lawsuit in court against the wirehouse.
“I hope it was a good result for Ms. Booker, but I view her settlement — the day before [CEO James Gorman] testified before Congress — as nothing but a loss for workers at Morgan Stanley, especially Black financial advisors, women financial advisors, and for the investing public, frankly, who will never hear evidence of the important things she had to say and the damning allegations she had the courage to raise,” said Bish, who was not involved in Booker’s case.
Booker’s attorney did not respond to a request for comment and a spokesperson for Morgan Stanley declined to comment on the stipulation of dismissal.
Booker is not alone. Since at least the 1970s Morgan Stanley has been accused of race and sex discrimination, according to Stowell & Friedman’s 2016 class action lawsuit underway in the Southern District of New York, Frazier v. Morgan Stanley, that has similar allegations of systemic racism against the investment bank.
The plaintiffs in the class action lawsuit allege that Black financial advisors at Morgan Stanley “are often treated with disrespect and experience a hostile work environment,” according to court documents. Plaintiffs’ claims for that case are still pending in court but are hamstrung by a lack of access to critical information, Bish said.
“Morgan Stanley has fought plaintiffs’ attempts to subpoena or depose Marilyn Booker, court-appointed settlement monitors, and others with knowledge of the firm’s racially biased corporate culture and has also refused to produce its internal corporate reports that evidence its analysis and knowledge of the firm’s discriminatory practices and how they uniformly harm African American financial advisors,” Bish said.
But Booker’s latest filing to dismiss her lawsuit “with prejudice” means she will likely be unable to file similar claims again.
“I would be stunned if Morgan Stanley did not require her to sign a non-disclosure agreement to stop her from helping other victims of Morgan Stanley’s discrimination and require cooperation with the firm,” Bish said.
The allegations
Booker was the Global Head of Diversity for 16 years, according to court documents. In 2010 she was removed from the position and later appointed the head of the new Urban Markets Group. She was ousted from the wirehouse in December 2019.
Booker claimed in court documents that she was tokenized and that leadership at Morgan Stanley mostly mentored white, male financial advisors and trainees — while ignoring minorities, including women of color. Black women especially faced unequal pay and retaliation after complaining about issues at the workplace, Booker alleged.
She said four unnamed Black financial advisors complained to her about unfair commission splits, being barred from attending meetings, not having mentors, and not being invited to join teams at the wirehouses, according to court documents.
Booker alleged in court documents that she was fired shortly after pushing leadership to adopt Project Genesis, a program she spearheaded which would have confronted systemic racial issues advisors of color face, like a lack of support, inability to get onto teams, unfair commission splits, and barriers to partnering with white financial advisors.
In her filings, Booker also criticized the firm’s diversity numbers — but the low representation of minorities is an industry-wide problem.
A 2020 Cerulli report found that less than 3% of advisors self-identified as Black, 5% as Hispanic or Latino, and 4% as Asian. By comparison, the U.S. population is 13% Black, 18% Hispanic or Latino, and 6% Asian, according to the Census.
Marina Shtyrkov, a senior analyst with Cerulli, said women are also underrepresented, making up 18% of financial advisors. She also said women advisors are more likely to have women as clients.
“Specifically, when it comes to advisors of color, we know that advisors are more likely to work with clients who are like them,” she said. “There are investor segments right now that are being underserved by the wealth management industry for a number of reasons — but one of which is they do not see their communities reflected in the financial advice community. And so by broadening the diversity of their advisory force, a firm can also broaden the diversity of the types of clients they serve.”
Booker also sharply criticized the wirehouse’s mandatory arbitration process, which can bar employees from seeking legal relief for civil rights violations, per court documents.
“Unless Morgan Stanley abolishes forced arbitration for its Black employees,” Booker said previously in court documents, “any purported claim of ‘meaningful efforts’ to fight against racism means nothing.”
Bish similarly said that the arbitration process is unfair.
“It’s a rigged system set up by Morgan Stanley for Morgan Stanley that denies employees due process and the ability to join together to challenge the discrimination they face. It hides evidence and wrongdoing and is a big part of the firm’s deeply entrenched race discrimination,” Bish said.
Three of the plaintiffs in the class action lawsuit were “compelled” into private arbitration, Bish said.
“They set up all the rules. It’s private, it’s confidential. It’s behind closed doors in a conference room. There is no meaningful right to appeal — I mean, it’s a sham,” Bish said. “There are also very, very few African American arbitrators.”