NEW YORK (Reuters) - Morgan Stanley MS.N has agreed to pay $16 million to settle a discrimination lawsuit brought by African American and Latino financial advisers who said they were denied business opportunities.
The agreement also calls for the investment bank to spend an additional $7.5 million on internal diversity efforts, according to court papers filed in San Francisco federal court late on Monday.
Under the pact, Morgan Stanley will set up a settlement fund for a group of more than 1,000 financial advisers who have worked at the firm’s Global Wealth Management Group since 2002. The agreement still requires court approval.
The plaintiffs, in a lawsuit seeking class-action status, had accused Morgan Stanley of preventing minority financial advisers from fairly competing for business opportunities and higher compensation. The complaint said that branch office managers and sales managers, who are virtually all white men, distribute accounts and referrals to brokers in a biased manner.
“The firm believes this settlement is an innovative way to address historic industry issues and will advance our efforts to foster diversity and professional success within our financial adviser force,” Morgan Stanley spokesman James Wiggins said in a statement on Tuesday.
Morgan Stanley did not agree to any wrongdoing in the pact, which will last five years.
Under the agreement, a diversity monitor will oversee the settlement terms and the company will work with industrial psychologists to increase minority representation among its brokerage staff.
An attorney for the plaintiffs, James Finberg, said “the settlement provides injunctive relief that will increase opportunities for people of color at Morgan Stanley and make Morgan Stanley an even stronger company.”
The plaintiffs had announced a settlement in principle with the investment bank in August. Financial terms at the time were not disclosed.
The lawsuit was initially filed in 2006 as an age and gender complaint. It was later amended to include racial bias accusations. The settlement does not address the gender discrimination claims because of a separate lawsuit in U.S. district court in Washington, D.C., brought by female brokers that deals with those issues.
In April, Morgan Stanley agreed to pay $46 million and establish diversity monitoring to settle the gender discrimination lawsuit, which accused the firm of paying thousands of female brokers and trainees less than it paid men.
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