Decadelong Morgan Stanley race discrimination suit reaches settlement

A decadelong discrimination suit against Morgan Stanley came to an end this week after the last plaintiff remaining in the class-action complaint reached a settlement.

Federal Judge Richard Sullivan, now on the Second Circuit Court of Appeals, ordered the dismissal on Monday of discrimination claims brought by former Morgan Stanley broker Aisha Rada after learning that she had reached a settlement with the firm. Rada was part of a class action that at one time had included six other members, all of whom previously resolved their allegations against Morgan Stanley.

"Given that the claims of all the other Plaintiffs in this action have been resolved, the Clerk of Court is also respectfully directed to close this case," Judge Sullivan wrote in his order Monday.

Initial complaint filed in 2015

Morgan Stanley, like many large Wall Street firms, has been the subject of a number of discrimination suits over the years. This particular one started in 2015 with a complaint filed in federal district court for Southern New York by Kathy Fazier, another former Morgan Stanley broker who contended she had been virtually forced out of the firm's Honolulu branch by its discriminatory practices.

Frazier was joined in 2016 by the other six plaintiffs, all of them Black. Like Frazier, the ex-Morgan Stanley brokers Yared Abraham, O. Emmanuel Adepujo-Grace, Andrew Clark, Kwesi Coleman, Jeanna Pryor and Aisha Rada contended they had been systematically excluded from the best-performing and paying advisory teams and from receiving client referrals and books from retiring or departing advisors.

Frazier was a plaintiff in two previous class-action cases levelling racial and sex discrimination charges against the firm: Jaffe v. Morgan Stanley and Augst-Johnson v. Morgan Stanley. In settling both, Morgan Stanley agreed to adopt a series of internal policies and procedures meant to better ensure fair treatment of its employees.

Frazier contended in her complaint that none of the remedies called for in the two previous settlements was carried out faithfully. For instance, she said that she brought her concerns about discrimination to a diversity monitor appointed as part of the Jaffe settlement but that no corrective action was ever taken.

Frazier said in her complaint that she "lost substantial clients and earnings due to Morgan Stanley's conduct and her career has been irreparably damaged." She and the other plaintiffs, according to the filing, "lost wages and other benefits, suffered emotional distress and other nonpecuniary losses, and her career was irreparably injured as a result of Morgan Stanley's conduct."

A Morgan Stanley spokesperson declined to comment for this article. Representatives of Frazier and other plaintiffs' legal team, which included the well-known civil rights attorneys Suzanne Bish from the firm Stowell & Friedman and Benjamin Crump, did not return requests for comment.

'End-run around the civil rights laws'

Frazier, who went to Morgan Stanley from Merrill in 2007 and is now at J.P. Morgan Securities, also accused Morgan Stanley of trying to do an "an end-run around the civil rights laws" with a policy trying to bar discrimination complaints from being brought in court and through class actions. In 2015, the firm sent out an email to its financial advisors about an expansion of its Convenient Access to Resolutions for Employees, or CARE, arbitration policy.

According to Frazier's complaint, the messages set a deadline for opting out of a new policy requiring complaints to be taken up not in court but before arbitration panels administered by a private group called Judicial Arbitration and Mediation Services, or JAMS. They were also barred from bringing discrimination claims as part of class actions.

Frazier's complaint said the consequences of failing to opt out of the new policy were never made clear in Morgan Stanley's messages to advisors. 

"Consistent with the Firm's design, the e-mail went unnoticed by most employees and understood by even fewer of those who waded through the Firm's misleading disclosures," according to the complaint.

Frazier, who declined to comment for this article, agreed on Sept. 23 to a dismissal of her allegations. Other plaintiffs had left the case years before. Clark, for instance, had his charges dismissed in 2020 after informing the court he had reached a settlement. As is often the case in discrimination suits, the outcomes of the individual resolutions are almost impossible to know because most are accompanied by nondisclosure agreements forbidding the participants to discuss what they agreed to.

Long history of alleged discrimination

Allegations of racial, sex and age discrimination are common in the wealth management industry. Many of them are predicated on the notion that the brokerage workforce — long dominated by white men — doesn't properly mirror the diversity of the general population. A 2020 report from the research firm Cerulli found that just under 3% of all financial advisors consider themselves Black or African-American and only 18% are women. Census data from the same year found that 12.4% of the total U.S. population was Black and just over half was female.

Separate from the class action case brought by Frazier, Morgan Stanley was sued in February by a former advisor field trainer named Berdina Moore-Bonds who alleged race, sex and age discrimination and retaliation after she lost her job at the wirehouse in 2023. Moore-Bonds said she and another Black trainer were the only two managers to lose their jobs amid an internal reorganization, while a white male colleague was simply transferred to another division.

Morgan Stanley's industry rivals have come under similar scrutiny. Merrill was sued in November, for instance, after it adopted a policy similar to Morgan Stanley's requiring discrimination complaints to be brought before arbitration panels. That came a little more than a year after Merrill agreed to pay nearly $20 million to settle a discrimination case brought in a class action filed by a group of Black former advisors and more than a decade after it paid $160 million to resolve similar accusations. 

And in November, RBC Wealth Management was ordered by a Financial Industry Regulatory Authority arbitration panel to pay $9.7 million over allegations of age and sex discrimination against an advisor let go five years before.