Dismissal of Merrill discrimination lawsuit highlights industry's mixed record

Two Black financial advisors who accused Merrill Lynch of discrimination dropped their case against the Wall Street giant, a sign that the lawsuit may have been resolved in a confidential settlement.

Ravynne Gilmore and Lucinda Council had sued Merrill over "discriminatory policies, patterns, and/or practices" due to its "minimum threshold production credit requirements, lack of support, and inequitable teaming opportunities," all of which resulted in lower pay and fewer promotions for Black advisors than for their white counterparts. In a filing two days before Thanksgiving in Detroit's federal court, they quietly asked for dismissal of the case. A week later, the judge dismissed the case, which was filed last year nearly a decade after Merrill agreed to pay $160 million to settle an earlier discrimination lawsuit filed by Black advisors.

It's not immediately possible to say that Gilmore and Council received a settlement of their potential class action case from Merrill, according to Saba Bireda, the co-chair of the discrimination and harassment practice group at Sanford Heisler Sharp. The dismissal "without prejudice" enables Gilmore and Council to re-file their case, a provision that the parties may have agreed to if Merrill doesn't abide by the terms of a potential agreement, Bireda said. Because there was no certification of the class, it's not likely that there will be a public filing of the settlement agreement.

Plaintiffs often see "a benefit to being able to just move on with your life" by agreeing to settle a case, Bireda said, pointing out that the earlier action against Merrill took eight years to play out. Since "litigation is a big decision and it can be a long road," confidential settlements prove attractive to many plaintiffs filing discrimination cases, Bireda said in an interview.

"It all comes down to whether the client feels that the settlement offer is going to be enough to make it worth walking away," she said. "As an attorney, I try to advise the clients on the risks that might be involved with going forward."

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Representatives for Merrill, part of Bank of America, declined to comment on the case. Lawyers for the plaintiffs didn't respond to an email. Industry news outlet AdvisorHub first reported the lawsuit had been dropped.

The dismissed case underscores the complexity within the industry's frequent pledges to hire more diverse talent and evolve into a more welcoming place for historically excluded groups. Many large brokerages and wealth management firms have reached eight-figure settlements over discriminatory practices in recent years, including Edward Jones ($34 million), Wells Fargo Advisors ($35.5 million), MetLife ($32.5 million) and J.P. Morgan Chase ($24 million). Last year, a former global head of diversity at Morgan Stanley dropped a race and gender discrimination case against the firm.

Merrill has earned a reputation for driving positive shifts in the industry by disclosing the demographics of its financial advisors in 2020. In September, the Association of African American Financial Advisors gave Merrill Wealth Management President Andy Sieg its first-ever "Spirit of the VISION" Award in honor of the firm's hiring and promotion of Black advisors. Between 2015 and 2020, the share of Black advisors in the firm's ranks grew to 4.5% from 2.5%, alongside increases in Latino and female brokers as well. But Merrill hasn't released any updates on its advisor demographic data for the past two years.

In an annual "racial justice scorecard" compiled by shareholder advocacy organization As You Sow, Merrill parent Bank of America received a ranking of No. 180 out of 1,010 publicly traded firms and No. 33 among 141 companies it graded in the financial services industry. The company received 100% scores for its public statements, corporate responsibility and its diversity, equity and inclusion department, but much lower scores in four other categories: "acknowledgement of key terms" (46%); "DEI data" (22%); "external actions" (15%); and "environmental justice" (-25%). Bank of America drew an overall score of 26%, which was far below the 48% grade of the sector's top firm, American Express. 

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As You Sow's criteria penalizes companies with a negative percentage point in the last category if they have faced any racial discrimination lawsuits since 2010, according to Olivia Knight, the organization's racial justice initiative manager. The formula puts lawsuits in the "environmental" category because they reflect "adverse effects" to Black, Indigenous and other people of color and "harmful business practice outcomes, such as racial discrimination," she said in an email. 

"We believe it is important to track racial discrimination lawsuits because they provide us with an inside look into the company's business practices," Knight saidl. "While many companies are making strides in aspects of their racial equity and DEI goals, the occurrence of a racial discrimination lawsuit shows there is more work to be done internally to make the company a safe and equitable environment for BIPOC individuals."

Gilmore and Council had alleged in their lawsuit that Merrill "engaged in an intentional, company-wide, and systematic policy, pattern, and/or practice of discrimination against African Americans." Gilmore was a Merrill broker from October 2017 to January 2020 in branches located in Troy and Warren, Michigan, while Council worked at the firm's Paramus, New Jersey branch from March 2018 to September 2019. Today, Gilmore isn't registered with any firm on BrokerCheck. Council is with Pruco Securities and Prudential Financial Planning Services.