NEW YORK (CNNfn) - Smith Barney asked a federal judge Tuesday to give preliminary approval to a settlement between the brokerage and a group of women employees, ending a 18-month sexual harassment and discrimination case.
As part of the proposed settlement, Smith Barney agreed to spend $15 million over the next four years on programs to attract, promote and retain women.
The brokerage firm must also establish a centralized database to track all harassment and discrimination complaints. Smith Barney, a unit of the Traveler's Group, has also committed to work toward increasing the percentage of women entering the financial consultant training program to 33 percent for the next three years. It's currently 31 percent.
The percentage of females entering the capital markets and investment banking training programs will increase to 25 percent by Dec. 31, 2000. The number of female retail assistant branch managers will increase to 10 percent.
The 23 women who worked in the Garden City, N.Y. office designated as "class representatives" will share in an additional $2.05 million. The amounts they are to receive range from $20,000 to $150,000.
Employees who wish to pursue individual cases against Smith Barney can either settle the disputes out of court, go to non-binding mediation or take their cases before a three-person alternative dispute resolution panel.
There are no caps on the punitive damages individuals might receive. They will be eligible to seek money for lost pay and lost promotions, Smith Barney has also agreed to pay up to $5,000 in attorneys fees for each plaintiff, regardless of the outcome of their complaint.
Claimants who go before the panel can also seek punitive damages. They must be able to prove that a Smith Barney executive in its investment banking or capital markets units acted, or failed to act, with "willfulness or reckless indifference."
Hearings before the alternate dispute resolution panel will be open to the public, unless the claimant prefers otherwise.
U.S. District Court Judge Constance Baker Motley said she would consider the proposal. If she gives preliminary approval, notice will be sent to about 20,000 women and a fairness hearing will be held. The proposal would then require final court approval.
Smith Barney first reached an agreement "in principle" with the 23 individual plaintiffs, all former and current employees, on Oct. 9.
If approved, the settlement would allow Smith Barney to put to rest one of the most infamous sexual discrimination cases on Wall Street.
The suit was filed in May 1995 by three women who alleged that Smith Barney brokers at a branch office harassed and intimidated female employees in a basement meeting area that become known as the "boom-boom room." They also charged that women weren't paid and weren't promoted as much as men were.
By 1997, the original plaintiffs were joined by an additional 20 women and received the support of the National Organization for Women, which proclaimed Smith Barney a "Merchant of Shame."
Patricia Ireland, president of NOW, said the settlement is the first step toward what she hopes would be real reforms throughout the securities industry.
"It's a first step to reforming Wall Street employment practices. We are pleased Smith Barney won't be doing business the old fashioned way."
"We will be monitoring Smith Barney's progress and will step up our campaign to change NASD rules and to eliminate mandatory arbitration in discrimination complaints," she said.
Of the 23 original plaintiffs, only one is still a Smith Barney employee.
"The settlement is designed to effect real change...rather than simply deliver monetary rewards to plaintiffs," Smith Barney Chairman and Chief Executive James Dimon wrote Tuesday in a letter to employees.
Mary Stowell, one of the plaintiffs' attorneys, said the allegations that were settled against Smith Barney are also rampant throughout the securities industry.
She said they are proof that securities regulations that prohibit plaintiffs from taking the cases to court need to be changed.
"What we're seeing at Smith Barney is systemic throughout the securities industry, (because complainants) cannot take their case to a public forum and have a public hearing. That allows the securities industry to sweep it under the rug," Stovall said.
Lorraine Parker, one of the plaintiffs, said Smith Barney managers across the nation acted like "clones" by subjecting women employees to the same abuses.
"When you're labeled a Playboy bunny, you start to examine yourself and really wonder who you are. I heard stories that mirrored mine. Women from across the country were sharing the same experiences as those in Garden City. It's my opinion that human resources was biased and swept it under the rug," she said.
Two of the employees of the Garden City office, including original claimant Pamela Marten, said they were unhappy with the settlement and would continue their court fight.
-- By staff writer Cyrus Afzali