Merrill Lynch, a part of
Bank of America Corporation
), has agreed to pay $160 million to settle the racial bias
lawsuit filed against it on behalf of 700 African American
brokers. The settlement amount to be disbursed to the claimants
will be the largest compensation ever paid by an American
employer for a racial discrimination suit.
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The lawsuit filed in the later half of 2005 by George McReynolds
alleged that Merrill Lynch's policies and procedures favored
white brokers by entitling them to lucrative accounts while the
African Americans were given clerical positions with lower pay
and limited growth prospects.
McReynolds describes the present development as the end of a
"long journey" with lengthy and rigorous hearings in federal
courts for eight years which includes two appeals at the United
State Supreme Court.
Merrill Lynch was acquired by Bank of America, or BofA, in 2009
and the latter was well acquainted with the pending lawsuit
against the acquired unit. For BofA, which is still dealing with
lawsuits pertaining to the mortgage crisis, the compensation
amount will increase its legal expenses and hamper profitability
in the long run.
Nevertheless, as confirmed by a spokesman for Merrill Lynch, BofA
is now striving to improve the working conditions for Blacks with
equitable rights for all.
BofA is not the only bank facing the consequences of racial
lawsuits. In Jul 2012,
Wells Fargo & Company
) agreed to pay nearly $175 million to settle civil charges
against it. The lawsuit accused Wells Fargo of discriminatory
lending practices against qualified African American and Hispanic
borrowers regarding home loans. In Jun 2012, the mortgage lending
SunTrust Banks, Inc.
) agreed to pay nearly $21 million for similar discriminatory
Currently, BofA carries a Zacks Rank #3 (Hold). A
better-performing bank is
), which has a Zacks Rank #1 (Strong Buy).