Editor’s Note: Susan Antilla is an investigative journalist and author of “Tales from the Boom-Boom Room: The Landmark Legal Battles That Exposed Wall Street’s Shocking Culture of Sexual Harassment.” The opinions expressed in this commentary are her own.
Twenty-five years ago this month, three women at a Long Island branch of financial industry giant Smith Barney filed an explosive class-action sexual harassment lawsuit.
Their complaint described a branch office where it was acceptable for men to refer to their female colleagues as “b*tches” and “c*nts”; where the boss bellowed to the troops at an office Christmas party that the branch was “the biggest whorehouse in Garden City”; and where male brokers would assemble in a basement party room dubbed “the Boom Boom Room” to drink, party and engage in vulgar talk. The women also claimed that they were paid less than their male colleagues and weren’t promoted as frequently.
The suit was settled, with Smith Barney paying out $150 million, according to the women’s lawyers.
A quarter of a century after what became known as “the Boom Boom Room” lawsuit, Wall Street still has a long way to go in giving women the respect they deserve. Critical to fixing the problem is getting more women in the top jobs in finance, and establishing a system where sexual harassers are exposed and punished, not protected.
For decades, Wall Street firms have forced aggrieved employees to use closed-door arbitration instead of the public courts, keeping appalling behavior and evidence of pay and promotion discrimination mostly out of public view. In 2019, 60% of the female financial advisors surveyed by Investment News said they’d been sexually harassed on the job. And a recent PayScale survey found that among 15 industries it studied, finance and insurance had the largest “uncontrolled” pay gap, a statistic that measures median pay of all men versus all women, rather than look at pay by individual job categories, education and experience. Women in the uncontrolled group for the finance and insurance industry were making 76 cents on the dollar for every man.
The presence of women at the top can have a big impact on closing this gap. In an analysis of financial services firms in 2019, Deloitte said that, for every woman added to a C-suite, “the number of women in senior leadership… rose threefold.” A bigger female leadership presence could also impact rates of sexual harassment, according to academic research released last year. Professors at Winnipeg’s University of Manitoba, Quebec’s Université Laval and Texas State University said that the addition of a single female director was “associated with an 18.2% decrease in the sexual harassment rate” reported in job reviews. Having women in top positions is a powerful antidote for bawdy bro cultures.
There have been some gains for women in the financial world, but they have been frustratingly slow. Goldman Sachs recently appointed Kimberley Harris as a board member, and as of July, the company will have six women on its 13-person board. And Jane Fraser recently took over as CEO of Citigroup, a triumph for her and a milestone for women. She’s the only woman running a major US bank, and that matters to women trying to get ahead.
A survey released this year by Cerulli Associates found that 78% of female financial advisors say a major obstacle in their career was the limited visibility of women in leadership roles. But women occupied only about 22% of leadership positions at 107 US financial services firms described in the 2019 report by Deloitte. That’s up from about 15% in 1998, a seven percentage point gain over 21 years.
I broke the story about the Smith Barney women’s lawsuit in 1996, when I was a columnist for Bloomberg News. In the wake of that suit, women at other Wall Street firms piled on with similar complaints. It became a public relations nightmare for Wall Street leaders as allegations of unequal pay, denials of promotions and sometimes bone-chilling examples of sexual harassment made headlines. For years, I chronicled the securities industry’s sometimes farcical efforts to fix the problem with bromides, powerless committees and advertising campaigns that positioned financial firms as faithful friends of women.
I’ve learned that embarrassing, public litigation works. In 1998, for example, Merrill Lynch settled a class-action lawsuit brought by its female brokers, a transaction that, according to the women’s lawyers, cost it $250 million. It was forced by the plaintiffs to trash a system that allowed managers to pass out accounts of departing brokers to anyone they chose — typically men — opting for a new protocol that was more likely to include women. There were stumbles getting there, but women spoke up in a subsequent lawsuit against Merrill and the protocols went through another round of changes.
Covid-19 hasn’t helped the industry’s slow progress. Accenture recently interviewed 500 women in banking, insurance and capital markets, asking how the pandemic had impacted their careers. Incredibly, 62% of women in senior roles said they’d take a pay cut in order to get more flexibility in their work location.
“That really bothered me,” said Laurie McGraw, a managing director at Accenture, in an interview with me. “I feel like we’ve been trying so hard for equal pay, and here we go again.”
The career abuses that today’s Wall Street women deal with may not be as extreme as those of the 1990s. But should that be our bar for progress? On harassment, pay and advancement, Wall Street women still are waiting for management to finish the job of raising the bar.