Wells Fargo & Co. settled a dispute with a group of black brokers claiming the bank failed to give them the same career opportunities as their white colleagues.
The bank will pay $35 million to more than 500 financial advisers and trainees, according to a settlement agreement filed Friday. Wells Fargo also agreed to add employees tasked with recruiting and coaching black brokers, and to set up a $500,000 business-development fund.
“We do not agree with the claims in the lawsuit, but believe that putting this matter behind us is in the best interests of our team members, clients and investors,” Helen Bow, a spokeswoman for the San Francisco-based bank, said in an e-mail.
Wall Street’s biggest brokerages have faced lawsuits in recent years alleging sex or racial discrimination. Bank of America Corp.’s Merrill Lynch brokerage agreed in 2013 to a $160 million settlement with black brokers and a $39 million payment to female employees. Morgan Stanley agreed in 2007 to pay $16 million to a group of black brokers, court records show.
The Wells Fargo case was brought by six black brokers who said in a revised complaint filed Friday in Chicago federal court that the bank “engaged in an ongoing nationwide pattern and practice of race discrimination.”
Discrimination Claims
Black employees were passed over when brokers picked teammates or successors, and lucrative client accounts were often steered toward financial advisers who weren’t black, they said. Black workers were assigned to territories or branches that generated less money, according to the complaint.
Wells Fargo has more than 15,000 financial advisers, making it one of the biggest U.S. brokerages. The bank appointed David Kowach to run its brokerage unit in August. He replaced Mary Mack, who took over community banking just before the bank was engulfed in a scandal over unauthorized accounts.
U.S. District Judge Harry Leinenweber is scheduled on Jan. 24 to consider giving the agreement preliminary approval.
The case is Slaughter v. Wells Fargo & Co., 13-cv-06368, U.S. District Court, Northern District of Illinois (Chicago).