Merrill Lynch, a part of Bank of America Corporation (BAC), 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.
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 (WFC) 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 unit of SunTrust Banks, Inc. (STI) agreed to pay nearly $21 million for similar discriminatory actions.
Currently, BofA carries a Zacks Rank #3 (Hold). A better-performing bank is BankUnited, Inc. (BKU), which has a Zacks Rank #1 (Strong Buy).
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