Morgan Stanley said it would contest a lawsuit by its former head of diversity who alleged she experienced and witnessed “systemic racial discrimination” against African Americans at the bank.
Marilyn Booker, who joined Morgan Stanley in 1994 and served as its first global head of diversity for 16 years, claims in her lawsuit that senior “White male-centric leadership” refused to adopt her plan to address racial bias at the firm and instead terminated her in December.
The lawsuit, which was filed Tuesday in federal court in Brooklyn, New York, comes as Wall Street and corporate America are facing tough questions about their commitment to diversity in the wake of the Black Lives Matter protests following George Floyd’s death at police hands.
Booker opened her 47-page complaint by describing Morgan Stanley’s response to Floyd’s death, including a large contribution to the NAACP Legal Defense & Education Fund and the promotion of two Black women to senior leadership committees. She noted that Chief Executive Officer James Gorman had described the present moment as a “turning point in race relations.”
But she cast the bank’s recent statements and actions as hypocritical in light of its alleged past conduct. “Clearly, Black lives did not matter at Morgan Stanley,” she said.
In a statement, Morgan Stanley spokeswoman Mary Claire Delaney said the bank strongly rejected Booker’s claims and would “vigorously defend” the lawsuit.
“We are steadfast in our commitment to improve the diversity of our employees and have made steady progress — while recognizing that we have further progress to make,” Delaney said. “We will continue to advance our high-priority efforts to achieve a more diverse and inclusive firm.”
Only 2.2% of Morgan Stanley’s U.S. executives are Black, according to company data. That number hasn’t budged for the last three years. In her lawsuit, Booker says that only 41, or fewer than 3%, of the 1,382 managing directors the firm has named since 2012 are Black.
Booker seeks a judgment that bars the bank from discriminating against her and other Black women and asks for unspecified damages. She alleges she was fired in retaliation for complaining about discrimination, a violation of New York state and city law.
‘Lip Service’
Booker, most recently a managing director at the bank, said she repeatedly voiced her concerns about “irrefutable and appalling patterns” in the firm’s hiring, retention and lack of advancement of Black employees. But she claims Morgan Stanley only paid “lip service” to these issues.
“Tirelessly, but to no avail, Ms. Booker tried to force Morgan Stanley’s leadership, including Gorman, to address the systemic racial discrimination rampant at the firm,” she said.
Morgan Stanley instead hamstrung her efforts by steadily decreasing her budget year over year, according to the complaint, “even though her budget would not amount to a drop in the bucket for Morgan Stanley when compared to the money it threw at other initiatives and the massive revenue the firm generated.”
Booker claims 14 Black managing directors, out of only a few dozen at Morgan Stanley, left between 2017 and 2019, but the bank made no effort to retain them. Gorman’s attitude, she said, was: “If you don’t like it, then leave.”
There was marked contrast with how White managing directors who threatened to leave were treated, she alleges.
‘Good Riddance’
“For Black MDs departing Morgan Stanley, the sentiment at the firm was ‘good riddance’ and ‘glad to see you go,’ rather than, ‘why are they leaving us?’ or ‘how could we do better?’” she said. “In contrast, when White MDs left or sought to leave, the firm made significant efforts to retain them.”
Booker, who joined Morgan Stanley after working as a lawyer, says in her suit that she helped manage on-campus recruitment, drafted an employee handbook, managed the firm’s affirmative action plans, performed community outreach and made public appearances to discuss the bank’s diversity efforts, including in 2008 testimony before Congress.
In her lawsuit, Booker says some of those appearances reflected Morgan Stanley’s use of her as a “token response and symbol of its purported commitment to diversity.
After Gorman became CEO in 2010, Booker says she was “inexplicably” removed from her position as global head of diversity and moved to a new position which focused on financial literacy for minority groups.
That job was eliminated a year later, and Booker says outgoing CEO John Mack created a new position for her as head of the Urban Markets Group where she delivered financial education programs to urban communities. That position was eliminated in December, she says.
Underrepresented
Morgan Stanley isn’t alone on Wall Street in its underrepresentation of African Americans. Of the more than 80 people now listed on the elite executive teams atop the six largest U.S. banks, only one is Black: Citigroup Inc. Chief Financial Officer Mark Mason.
In 2018, JPMorgan Chase agreed to pay $24 million to settle a discrimination suit brought by Black financial advisers. Morgan Stanley settled a lawsuit by a Black financial adviser in January for an undisclosed sum.
In the wake of the Floyd protests, Gorman
According to Booker, prior to Greene-Vincent’s promotion, 14 of the firm’s 16 operating committee members were White and 14 were men.
