Stark Lessons from Wall Street's #MeToo Moment
STACY PASSERI WAS looking for a promotion. Pacific Life Insurance was hiring someone to lead sales of its insurance products to stock brokers across the country. Passeri thought she was perfectly positioned as a field vice president at the firm, marketing these same products to brokerage firms in a western region of California that stretched from San Luis Obispo to Eureka, and she was eager for a bigger role. She’d heard that Mike Dahlquist, who held her same job title, was a contender too. But there were whispers about Dahlquist, who had a reputation as a partier. Women in the office talked about how he’d made unwelcome sexual advances. Passeri’s female colleagues had taken to rolling their eyes in reaction to his inappropriate remarks at work. Figuring that a man with his profile wouldn’t be taken seriously for a management role, she liked her odds for getting the job.
Passeri was wrong. She soon got the news from a senior vice president, Mike Bell, that Dahlquist had gotten the nod — and he would now be Passeri’s direct manager. She says she told Bell she wouldn’t be comfortable reporting to Dahlquist and tried to talk him out of making the hire, briefing him on Dahlquist’s reputation and suggesting he reopen the search. As Passeri would later describe it in court filings, Bell said she could trust him to keep tabs on Dahlquist and then offered some advice about her new boss: “Give him a chance,” he said. If anything went wrong, she recalls him telling her, “Let me know and I will help you.”
When Passeri had joined Pacific Life several months earlier, in April 2000, as a single mother of four with a flourishing career, she had high hopes. With a resume that included five years as a stock broker at Shearson Lehman Brothers and another 10 years in the insurance industry, “I was pretty tailor-made” for a job marketing insurance products to brokers, she recalled.
The dream job soured quickly once Dahlquist became her boss. She said the harassment began, full throttle, in March 2001.
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Passeri sent Bell a five-page memo that detailed Dahlquist’s pattern of harassment and made it clear that she no longer felt safe reporting to him. She also demanded an investigation.
She got the investigation; an investigator from HR interviewed Passeri and several other women who had professional interactions with Dahlquist. One witness told the investigator that she would not want to be left in a room with Dahlquist and that he was “touchy-feely.” Another simply refused to answer when asked if Dahlquist had made unwanted physical advances on her. The probe clearly raised red flags inside Pacific Life: Dahlquist was sent a warning letter and required to attend sensitivity training. Yet the investigator found “no evidence” that Passeri had been sexually harassed.
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In 2003, a jury found Dahlquist guilty of sexual battery, quid pro quo sexual harassment, and creating a hostile work environment — though it did not find that he’d done so with the intent to harm or offend. The jury awarded Passeri $2.5 million.
Wall Street’s #MeToo Moment
Passeri’s case was just one in a wave of lawsuits and arbitrations filed in the 1990s and early 2000s by women at financial firms that had tolerated a culture of rampant sexual harassment and gender discrimination. By the time Passeri filed her case, women had already filed complaints against Chicago brokerage Rodman & Renshaw and Detroit brokerage Olde Discount Corp., along with finance behemoths such as Smith Barney and Merrill Lynch. Their claims and others that soon followed alleged pay, promotion, and pregnancy discrimination, and in some cases contained explosive allegations of hostile work environments, rampant sexual harassment, and even rape. The biggest cases of that era, which collectively drew thousands of participants in class actions, led to large settlements: $54 million against Morgan Stanley, $150 million against Smith Barney, and $250 million against Merrill Lynch.
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We scoured court records, tracked down women plaintiffs and defendants in those marquee lawsuits, examined records in the arbitration database kept by the Financial Industry Regulatory Authority, or FINRA, and spoke with a dozen employment lawyers who had collectively handled thousands of discrimination cases over the years.
What we learned is that most of the accused men we were able to identify stayed in their careers. In one instance, a senior executive remained at his bank for 16 years after the firm lost an arbitration over his sexual harassment of a female colleague. We also found that, thanks to a broken system that allows brokers to exclude harassment and discrimination cases from their regulatory records, some became serial offenders who hopped from job to job in finance while continuing to harm female colleagues.
In sharp contrast, the careers of most of the women who brought harassment and discrimination claims were disrupted.
Employment attorneys confirmed that pattern. Several lawyers said that in their experience, most women across industries who spoke up about harassment wound up leaving their jobs — whether they got fired, quit, or agreed to leave in a settlement — while most of the men who created a hostile environment either stayed on at the same firm or quickly found employment elsewhere.
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Tammy Marzigliano, a partner at the New York employment law firm Outten & Golden, said women’s outcomes can be brutal: “Women who are brave enough to stand up against sexual harassment often find themselves ostracized and jobless,” while harassers often “walk away unscathed.” The very act of going public can poison a woman’s chance of finding future employment.
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The Doors Are Kicked Open
Wall Street only opened its doors to women in any numbers in the wake of a landmark settlement against Merrill Lynch in 1976, in a case filed by a woman with impeccable business credentials, the late Helen O’Bannon. O’Bannon had graduated from Wellesley College and earned a master’s degree in economics from Stanford; she’d worked for the House Banking and Currency Committee, the Treasury Department, and the Office of the Comptroller of the Currency. Despite her background, she did not make the cut at Merrill Lynch when, in 1972, she applied for a broker position in the firm’s Pittsburgh office. Yet four men, none of whom had more than a bachelor’s degree, landed broker jobs in the same office. One had dropped out of college due to poor grades. Two had flunked the company’s aptitude test, according to Merrill’s 1976 consent agreement with the federal Equal Employment Opportunity Commission. In the settlement, Merrill agreed to spend $1.3 million on recruitment and advertising in order to bring on more women and people of color as brokers.
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Since 1972, rules have been in place requiring all disputes between firms and their brokers to be heard in arbitration.
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One of most dramatic institutional changes sparked by Wall Street’s #MeToo moment in the 1990s was a decision by the Securities and Exchange Commission: broker licensing documents issued by the National Association of Securities Dealers, a FINRA predecessor, would carve out an exemption for discrimination claims, opening a window for individual women to have their cases heard by a jury.
But most women never got that chance. Firms revised or established their own mandatory arbitration policies to keep claims out of the courts, a maneuver that would not only limit liability — awards are historically much smaller in arbitration — but keep sexual harassment claims out of the public eye.
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