Sex and securities

Talk to prominent women in the business and you’ll likely hear the party line. They’ll say gender isn’t an issue, that you can succeed purely on merit in this business, and that being a woman can be an advantage. But there is always the suspicion that prominent women are less likely to talk about negative experiences for fear of alienating the contacts that are so critical to their success. When Investment Executive surveyed female brokers during the annual brokerage report card, we got a different story. Behind the veil of silence some women feel unwelcome.

Few people in the business are willing to talk about sexual harassment at their firms, and no one is willing to risk their job to raise the issue. Nevertheless the stories persist. One Ontario-based investment advisor claims that at his former firm, a national securities dealer, perks were doled out to female staff in exchange for sexual favours for the firm’s male chief executive. ‘There was a parade of young ladies doing the Monica Lewinsky thing,’ he says.

A British Columbia-based advisor, formerly with the same firm, recalls a due diligence trip to scrutinize a real estate investment that included strippers on the bus out to the project site. This was the advisor’s first and last such trip.

Stories such as this are not limited to one particular firm. Another advisor with a major investment dealer complains that a recent branch Christmas party was held at a strip club.

‘A lot of the men could opt out by saying they were too busy and still save face. [About a third] said they were too busy because they didn’t want to go, a pile went because they were cajoled into going, and a pile went because that is their interest … You won’t see me dead in a strip joint.’

Although these sorts of office ‘social’ functions exclude the women in the branch, the advisor sees few outlets for her concerns. ‘Who am I going to complain to, my jock district manager, who has taken [the branch manager] under his wing?’

There is no shortage of anecdotes about sexual harassment, from the stories of breast implants given as Christmas bonuses at Gordon Capital Corp. in the 1980s, to tales of bond traders who are as predatory sexually as they are on the trading desk.

This sort of activity may constitute both illegal sexual harassment and sexual discrimination, says the Canadian Human Rights Commission. ‘The forms of prohibited conduct that are discriminatory run the gamut from overt gender-based activity, such as coerced intercourse, unsolicited physical contact and persistent propositions, to more subtle conduct, such as gender-based insults and taunting, which may reasonably be perceived to create a negative psychological and emotional work environment,’ the CHRC says.

Some women complain potentially discriminatory activity is not limited to strip club functions. It also comes in more subtle forms. One advisor believes the men in the firm naturally take better care of one another in everything from division of sales support to redistribution of clients and accounts among the branch’s advisors.

Complaints about the fairness of account redistribution are not uncommon, and for women who are not accepted as ‘one of the guys,’ it can be a subtle, yet fundamental, barrier to success. This sort of quiet discrimination may not be limited to women; anyone who is not part of the ‘inner circle’ in a branch may feel hard done by. But in a male-dominated profession it is not unusual that women feel excluded.

Allegations of this kind can be difficult to prove, yet they have been enough to wring settlements from brokerage firms in the U.S. market. Two class action suits – one against Smith Barney and another against Merrill Lynch & Co. Inc. – have been settled recently. The case against Merrill alleged subtle discrimination in areas such as pay and account re-assignments. The deadline for joining that settlement was March 2, and about 900 of Merrill’s 2,900 female brokers are said to have applied to share in the deal.

In this case, the original eight women who filed the suit are sharing a US$600,000 settlement, and their cases are all eligible for further awards under an agreed independent arbitration process.

The other women who applied to join the settlement will not share in the original settlement, but they are also eligible for arbitration. There is no preset limit to the ultimate total of those awards.

This settlement does not cover Merrill’s Canadian brokers, and Stowell & Friedman, the Chicago-based law firm that led the suit on behalf of the women, says it has received no inquiries from Canadian brokers seeking to join.

The deadline for joining the Smith Barney settlement is the end of May. The allegations against the firm claim more serious problems, such as the existence of a ‘boom boom room’ in one New Jersey branch, and more obvious sexual conduct in others.

To date there have been no prominent sex harassment or discrimination suits involving the securities industry in Canada. Instead, it seems these issues continue to be dealt with internally. While this may be preferable for both sides, it does nothing to curtail offensive behaviour. Those who speak about the issue typically insist on anonymity. ‘If my name gets out I’m history,’ one female advisor says.

Nevertheless, the courts have found employees are protected from reprisals for filing harassment complaints, even if the complaint is unsuccessful. The Supreme Court of Canada has also held that employers can be liable for the harassing conduct of their employees although rude behaviour does not automatically constitute sexual harassment.

Strippers on due diligence trips, branch functions with lap dancers and trading-sex-for-sales conferences – not only do they create a a negative work environment, but they may also be a sex discrimination suit waiting to happen.