Alleged Gender Discrimination in the Financial Services Industry

On Tuesday, March 30, 2010 three women filed a lawsuit against Bank of America Corporation and Merrill Lynch alleging gender discrimination. According to a New York Times article, the suit was filed in the United States District Court in Brooklyn and accused Bank of America and Merrill Lynch of giving male counterparts of the three employees bigger bonuses and better opportunities. The women also said that the companies sought to punish them when they complained about perceived inequalities.

An article appearing on investmentnews.com indicates that the plaintiffs claim they were discriminated against as financial advisers in the opportunities made available to them, including account distributions, pay, and the professional support they were provided. The plaintiffs are seeking injunctive and declaratory relief, an award of back and front pay, and compensatory and punitive damages. The New York Times article also indicates that the complaint also asks the court for class action status.

A spokeswoman for Bank of America, Shirley Norton, denied the allegations, stating: "Bank of America has a strong track record of hiring and developing associates and has been recognized for its success in creating and supporting a diverse and inclusive workplace. We do not tolerate discrimination and discrimination of the type alleged in the complaint violates the bank's policies and values. Bank of America is regularly recognized as one of the top companies for women for its diversity policies."

Allegations of gender discrimination within the financial services industry is not new; there have been numerous cases filed dating back to at least the mid-1990s. While the plaintiffs and defendants have changed, they share a common set of claims. In my experience as an economic and statistical consultant on these matters, the central issues relate to the "production" of financial advisors, however the particular financial institution measures it. Plaintiffs contend that the production of female financial advisors is lower than that of their male counterparts, leading to lower compensation, because of discrimination by the employer. Employers have argued that while the production of some female financial advisors may be below that of their male counterparts, the difference is not attributable to discrimination by the employer.

The issues raised by these claims are difficult to study because they involve factors that are hard to measure. There are several possible non-discriminatory explanations, ranging from attachment to the labor force to differentials in selling and negotiation skills to customer preference. Exploring these possible explanations requires a multi-disciplinary approach to the analysis. The answer to the question cannot be found by a simple comparison of the production of male and female financial advisors, and concluding that any difference must be attributable to gender discrimination by the employer.  The real answer is likely to be found outside of the traditional realm of econometrics.