Accusations that Merrill Lynch discriminated against black employees will cost the financial advising firm $160 million after it agreed to settle a lawsuit brought by a worker in 2005.
Longtime Merrill broker George McReynolds accused the brokerage of steering blacks into clerical jobs and diverting lucrative accounts to white brokers, resulting in lower pay and fewer career opportunities for black employees.
The New York Times reported Tuesday that the resolution to the eight-year legal battle represents the largest sum ever paid out in a racial discrimination suit from an employer in the United States. The case went through two appeals at the United States Supreme Court.
A court date had been set for next year, but the firm chose to settle.
"It's been a long journey," McReynolds told the Times.
"There were a number of years where we didn't know where it was going. I never gave up. As long as it was alive, I thought we had a chance."
McReynolds, a broker in Nashville, Tenn., still works for Merrill Lynch.
As for the source of the bias, the first black chief executive at the firm, E. Stanley O'Neal, said in a deposition in the case that first-time white clients might not feel comfortable entrusting their money to brokers who weren't white, according to the Times.
The suit was filed on behalf of 700 black brokers at the company, but that number could go to up to 1,200 current and former black employees. A fifth of the settlement could go to lawyers involved in the case, according to the Times.
"This settlement is a perfect example of how institutional racism works," said Maya Rockeymoore, a policy analyst based in Washington D.C.
"There may be no official policy on the books saying whites only but the effect of discriminatory practices fueled by racial bias and exclusionary attitudes has the same impact."
A spokesman for Merrill Lynch and Linda Friedman, a Chicago lawyer who represents the brokers, confirmed the preliminary settlement with the newspaper.
"We are working toward a very positive resolution of a lawsuit filed in 2005 and enhancing opportunities for African-American financial advisers," Bill Halldin, a spokesman for Merrill Lynch, told the paper.
Merrill Lynch is part of Bank of America Corp.
Wilson Dizard contributed to this report. With Al Jazeera and Reuters