Ex-Morgan Stanley Manager Claims Race Discrimination
A former manager in charge of developing financial advisor trainees for Morgan Stanley sued the firm on Thursday for wrongful termination, citing race discrimination and retaliation years after the company reached a multi-million-dollar settlement of a class-action racial bias suit.
John Lockette, an African-American and former Smith Barney adviser, said that after joining Morgan Stanley as one of 12 regional training officers for branches in its Mid-Atlantic region in 2013 he was subject to demeaning language and pushback from at least two complex directors and a regional manager.
The firm terminated him in 2016 in retaliation for raising concerns about discriminatory practices, despite his success at his job, he alleged in a complaint in U.S. District Court in the Southern District of New York that cited two earlier class-action settlements.
“The reforms obtained in the class action settlements have utterly failed, and Morgan Stanley’s discriminatory policies and practices continue in full force,” Lockette argued in the complaint. “Morgan Stanley maintains stereotypical views about the skills, abilities and potential of African Americans that form the basis of the policies that result in differential treatment of African American managers.”
Under a 2007 settlement and consent decree, Morgan Stanley agreed to pay $16 million to African American and Latino financial advisors, and to devote another $7.3 million toward diversity programs.
“If you look at their African Americans in management it’s just a revolving door,” said Linda Friedman, whose Chicago law firm Stowell & Friedman represents Lockette and has a long history of filing complaints against Wall Street firms on behalf of women and minorities. “They don’t hire, they don’t promote, they don’t mentor, they don’t groom, and they don’t listen when people want to raise reforms.”
Christine Jockle, a Morgan Stanley spokeswoman, denied the allegations.
“The firm is strongly committed to nondiscrimination, and looks forward to addressing this former employee’s claims on the merits,” she said in an emailed statement. She declined to discuss legal strategy, but Morgan Stanley is currently seeking to remove another discrimination complaint that Stowell’s firm filed in federal court in 2014 to arbitration.
Lockette was the only African-American regional training officer in the firm’s 12 regions, according to the lawsuit. His New Jersey-based Mid-Atlantic region was for a time led by Drew Hawkins, an African-American who left Morgan Stanley by “mutual agreement” in November, and included one African-American among six complexes and two non-producing African-American managers among the region’s 40 branch offices.
“As a result of….Firm-wide policies and practices, African Americans are intentionally underrepresented in management positions at Morgan Stanley, and the few African-American managers are often purposefully regulated [sic] to less creative branches and positions,” the complaint says. (Stowell said she did not request class-action status because the company does not have enough African American managers to constitute a class.)
Lockette began his brokerage career in 1999 as a financial advisor at Merrill Lynch and moved to Smith Barney in 2001. He gave up his book “to enter management” as a regional planning specialist in 2007 but after Smith Barney’s integration into Morgan Stanley in 2009, he was fired as part of a reduction in force that “disproportionately terminat[ed] diverse managers and retain[ed] managers who were white males,” the complaint says.
It alleges that he was rehired in fall of 2013 as the firm tried to remediate its “failure to hire and retain diverse FAs” as required under the consent decrees. Despite hostile pushback from two complex managers, include one in Baltimore who allegedly blocked him from working with associates in the complex and who “asserted” that African Americans were less capable of passing the Series 7 licensing exam, Lockette’s complaint says that the region moved from last place to first place by mid-year 2015 in terms of advisor associate “effectiveness.”
He nevertheless received a consistent series of poor reviews, was denied raises and a significant bonus in January 2016 and was terminated in August 2016 by the firm’s training director. The supervisor relied on “vague complaints,” including that Lockette was too ‘verbose,’ but raised no “concrete performance concerns,” the lawsuit said.
Lockette is seeking reinstatement of his position as well as unspecified compensatory damages and expungement of his firing, according to the complaint. He claims that he has not been able to find employment in the industry since Morgan Stanley terminated him in August 2016 “without ever raising any concrete performance concerns.”
The complaint seeks unspecified lost compensation and benefits, reinstatement to his position with retroactive seniority and full back pay and benefits, expungement of the reasons for his termination on regulatory records and compensatory and punitive damages.