A federal judge dismissed a lawsuit by a group of black financial advisers who claimed Bank of America Corp.'s brokerage Merrill Lynch discriminated against them on compensation.
The brokers said the design of the retention-bonus system in place at the time of Merrill's merger with Bank of America in 2009 was intentionally discriminatory, but a federal court judge disagreed in a decision on Wednesday.
Retention bonuses are commonly used by companies going through acquisitions to stem defections. Merrill's bonuses favored advisers with higher levels of production, which are the fees and commissions an adviser earns on the assets he or she manages.
The advisers in the complaint said Merrill had engaged in a nationwide pattern of race and gender discrimination, and as a result women and African Americans had lower production levels than white men.
However, Judge Robert Gettleman of the U.S. District Court for the Nothern District of Illinois wrote Wednesday that "knowledge of past and even present discrimination alone does not make it plausible that defendants actually adopted" its retention bonus system with discriminatory intent.
Merrill spokesman Bill Halldin said the company is pleased with the judge's ruling, but declined to comment further.
The plaintiffs on this case are also involved in a separate racial discrimination lawsuit filed in 2005 against Merrill. That case, which is still pending, claims there's systemic discrimination at Merrill.
Nothing about Wednesday's decision bars the plaintiffs from recovering the "lost bonuses" through the pending discrimination case, which is also before Gettleman, said the advisers' lawyer, Linda Friedman, a partner at Stowell & Friedman in Chicago.
"They will be fighting on against the systemic discrimination at Merrill Lynch and to level the playing field for African Americans," she said.
