As many as 2,500 women will be told they might be eligible for compensation from Merrill Lynch & Co., now that a federal judge has given preliminary approval to a settlement in a gender discrimination lawsuit.
Eight female financial consultants sued the nation's largest brokerage firm in February 1997, claiming the company unfairly directed business to their male colleagues. The women won class-action status and represented 2,500 current and former brokers in the lawsuit.
In a conference call with lawyers from both sides Thursday, U.S. District Judge Reuben Castillo said, "This (settlement) document easily, easily meets the criteria for preliminary approval, and so I am happy to give it preliminary approval today."
Terms of the settlement were announced in May. They call for the women to be notified that they could be eligible for benefits under the settlement. Any claims filed by those women will be heard by mediators, who would decide whether each woman should be compensated and by how much. There is no maximum amount of money available to the women.
The settlement also calls for Merrill Lynch to end a mandatory arbitration system that has been used to settle all discrimination cases involving brokers.
Attorneys for the women argued that system, which is widely used by Wall Street firms, resulted in biased rulings because most of the arbitrators were men.
Reuben will schedule a fairness hearing after the women are notified, lawyers said. If the settlement is still considered fair after that hearing, he probably will give it final approval, perhaps in September, they said.
Besides claiming regular compensation under the settlement, the eight women who originally brought the suit will divide $600,000, which their attorneys have described as a bonus for representing the class.
The lawsuit claims that Merrill Lynch supervisors helped male brokers be more successful than their female counterparts by giving them a disproportionate share of the accounts of departing brokers as well as walk-in and call-in customers.
Under terms of the settlement, Merrill Lynch is to develop an objective system of distributing such accounts.
The lawsuit against the New York-based company was filed in Chicago because the woman who initiated the lawsuit, Mary Beth Cremin, was a broker in its suburban Northbrook, Ill., office.