Wells Fargo Advisors to Pay $35.5 Million to Settle Race Discrimination Suit
Wells Fargo Advisors will pay $35.5 million to settle a putative class-action lawsuit filed three years ago that alleged discrimination against African American financial advisors, according to an agreement filed late last week in a Chicago federal court.
As part of the settlement, the brokerage unit of Wells Fargo Corp. also agreed to so-called programmatic reforms, including changes to recruiting and management training programs and reviews of its remedial efforts that will be effective for at least four years. The tentative settlement, which was filed in the U.S. District Court in the Northern District of Illinois on Friday, affects more than 320 current and former brokers, according to Linda Friedman, a partner at Chicago-based law firm Stowell & Friedman that represented the brokers.
Under terms of the agreement, the lawyers will receive about $8.9 million of the settlement amount plus costs, while the six named plaintiffs will each receive $175,000.
“The money doesn’t undo what’s been done to people over the course of their lives or careers,” said Lance Slaughter, a named plaintiff who has been a Wells broker for 11 years and is based in Washington D.C. “The programmatic relief is a major concern for me. Some of the enhancements can really make a difference for people who are hurting.”
In his claim, which was filed in September 2013 one month after Merrill Lynch agreed to a $160 million settlement of a racial discrimination suit, Slaughter alleged that he and other African American brokers and trainees were denied business opportunities, excluded from high-producing teams because of their race. His case was combined in 2014 with other discrimination complaints against Wells Fargo Advisors’ private client group and its in-bank branch brokerage programs.
Under the proposed settlement, which awaits approval from Judge Harry Leinenweber, any current or former African American broker or trainee employed at Wells Fargo at any time from September 2009 to December 31, 2016, is eligible for an award. Payments will be based on length of service at the Wells broker-dealer and personal experiences regarding account transfers, teaming, managerial support and other factors that will be evaluated by one or more independent “neutral” parties selected by Lynn Cohn, the Special Master appointed by the court.
Wells Fargo Advisors, whose parent company agreed in September to pay $185 million to settle charges of creating false banking and credit card accounts for customers, denied all claims of race discrimination.
“[P]utting this matter behind us is in the best interests of our team members, clients and investors,” spokeswoman Helen Bow said in an e-mailed statement. “Resolving this matter allows Wells Fargo Advisors to continue to focus on providing a diverse and inclusive work environment where all of our team members can thrive through industry leading recruiting, coaching, leadership and business development practices.”
As part of its remediation efforts, Wells agreed to end attempts to require new brokers and trainees to reimburse the company for training costs, a practice challenged in a previous lawsuit against Wells Fargo Advisors.
It also agreed to set up a “resource” focused exclusively on recruiting black advisors and trainees, to review its branch manager assessment program to promote a diverse applicant pool for management positions and to establish a Business Development Fund of up to $500,000 to be used by African American brokers in private client group and bank offices.
Fewer than 1% of the approximately 15,000 brokers who worked at Wells Advisors from late 2009 until this year are African American, according to Friedman.
The $35.5 million tentative settlement exceeds a $32-million agreement Wells negotiated in 2010 to resolve claims from female advisors of sex discrimination.
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This needs to happen at JP Morgan Chase. They run that place like a plantation and pass over Black advisors like the angel of death at the first Passover. The Black advisors got a raw deal though. I realize they probably couldn’t afford to pay the attorneys upfront, but their attorneys are making too much money from their pain and ruined careers relative to the actual plaintiffs.
But, at least it is a START. What will help, a bit, is the fact that for four YEARS someone will be looking over WFA shoulder—and that will help. Not perfect-but it will help and the money does comes in handy. I received a lot more than I had expected from the 2010 female advisors sec discrimination case that WFA paid back in 2010 so it does add up. The sense of ‘winning’ also has emotional rewards.
What about Hispanic financial advisors at WFA?
What about them? Is that the best you can come up with? Why does everyone always add their group to the aggrieved whenever Black people speak up for themselves? We can’t say Black Lives Matter without everyone saying “What about us? That’s racist!”
If you think your group have been discriminated against, gather evidence and file a lawsuit. Also, the term Hispanic is a contrived label. If you are talking Puerto Rican’s or Dominicans, they are just light skin Black people that speak Spanish. Just like I just happen to be a dark skinned Black man that speaks the language of my former oppressors. They shipped Blacks all over the world. In the Caribbean, those Blacks mixed with the indigenous tribes and the Spanish Europeans to make what they call “Hispanics”, but since all other groups are genetic recessive, you’re most likely just light skinned Black people speaking the language of your former oppressors. Mexicans are descended from the Aztecs and those from Peru, Ecuador, etc are descended from the Mayans but you get the point. Sorry for getting off on a tangent.
I had never thought about exactly what the word “Hispanics” included. I’m going to research that and get more educated on that word just out of personal curiosity. Meanwhile–Hispanics are WONDERFUL small business owners. They would be excellent in this business. I have 75% of my support staff (3 of out 4) are Hispanics and they are OUTSTANDING–AMAZING. They would be wonderful FAs (but they don’t want to provide investment advice so they want to stay in their current jobs).
I agree. Spanish speaking advisors can potentially do very well. Spanish speakers are a growing demographic and there tends to be a sense of trust and comraderie as opposed to the distrust and apprehension for financial products in the African-American community.
another good point!
A black Dominican Woman here 🙂 (albeit fair skinned, lol) I agree with both of your general sentiments! Advances made by Af.Ams in Wealth Management generally benefits black Hispanics such as myself. I am FA in NYC and have pursued fecund relationships with small business owners.
Good to hear. I’ve spent most of my career in NYC. Been an advisor since 2008/2009 until now. I’m in Queens now, closer to home, but if you’re developing great relationships, hold on to them. They’re worth gold.
OUTSTANDING!! great to hear !! keep up the good work–world needs you!
I missed the boat by 1 day. I started in May 2007 was released on 8/31/2009 due poor production which I endured as a FAIT. My Sr. Advisor packed up his book & went to another wirehouse without my knowledge, I found out when I reported to work the next day. I was subsequently reassigned to another Sr. Advisor but he was not interested in sharing only getting the best from my book at my imminent departure. I was finally assigned a branch in 12/2008, but by then the market tanked I was already pushing a wagon of bricks uphill. I’m glad that other advisors will get their fair due but once again Wells comes up a day late, literally, & a dollar short for me.