Salomon Is Told To Pay Broker $3.2 Million --- Sex-Bias Award Is the Largest To Come From 1997 Settlement After the `Boom Boom Room' Case
By Randall Smith

12/17/2002
The Wall Street Journal
C1
(Copyright (c) 2002, Dow Jones & Company, Inc.)

AN ARBITRATION panel ordered Salomon Smith Barney to pay $3.2 million to a female stockbroker, in the largest sum to be awarded in gender-discrimination complaints that arose after the brokerage firm's infamous "boom boom room" case.

The arbitration procedure was created as part of a 1997 settlement of a high-profile sex discrimination class-action lawsuit against the firm, now a unit of Citigroup Inc. The lawsuit rocked Wall Street six years ago with allegations of sexual harassment of women in a basement area that brokers called a "boom boom room" at a brokerage branch in Garden City, N.Y. That case triggered similar legal actions by brokers in other offices.

The discrimination claims -- along with others at Merrill Lynch & Co. and Morgan Stanley -- have led to changes in the way Wall Street firms supervise, pay and promote female brokers and other employees. In 1997, for example, Salomon Smith Barney agreed to spend $15 million on programs aimed partly at improving its record in hiring and promoting women.

At issue in the most recent award was a claim filed by Tameron Keyes, who was hired in 1991 as a broker in the Los Angeles branch of a Smith Barney predecessor firm, Shearson Lehman Brothers. In her claim, Ms. Keyes alleged that males in the Shearson office made sex-related insults; arranged for female strippers in the branch office; played pornographic videotapes in the sales manager's office; engaged in simulated phone sex on the speaker-phone in the office during work hours; and made lewd comments, some threatening and humiliating, directed at her.

The three-member panel, in a decision dated Dec. 12, found the workplace was "permeated with discriminatory intimidation, ridicule, and insults sufficiently severe and pervasive as to alter the conditions of her employment and create an abusive working environment." The decision also slammed the firm's "failure to undertake any meaningful investigation of these complaints, to interview witnesses," to learn whether the allegations were true or impose sanctions on those responsible. Finally, the panel said, the firm retaliated against Ms. Keyes after she complained.

A Salomon Smith Barney spokeswoman said the firm is "disappointed in the outcome but respects the process. Diversity initiatives during the past several years have helped us break new ground in establishing Salomon Smith Barney as among the most progressive employers in the securities industry in terms of providing a professional and respectful work environment." The firm is unlikely to appeal the decision, she added. Grounds for such an appeal are extremely narrow.

Ms. Keyes, who still works for Salomon Smith Barney in Beverly Hills, Calif., was awarded $1,521,080 for economic losses, $150,000 for emotional distress and another $1,521,080 in punitive damages, plus legal fees. She declined to comment. Her Los Angeles lawyer, Marvin Krakow, said, "Ms. Keyes is very happy with her current branch manager, wants to pursue her career, and doesn't want to create any disharmony in her office and so doesn't want to talk to the media."

The award is the first to come out of the dispute-resolution procedure created for those claimants who couldn't come to terms with the firm, according to Linda D. Friedman, a partner in the Chicago law firm of Stowell & Friedman Ltd., which represented Salomon employees in the class-action case related to the boom boom room. The room was named partly after a Broadway play called "In the Boom Boom Room," which featured a bar with dancing girls.

"Awards of this amount are extremely rare," said Mary Stowell, another partner at the firm, who added the result "shows how well the process can work."

Salomon Smith Barney and Merrill, which reached a similar accord covering about 900 claims in 1998, have together paid out hundreds of millions of dollars to settle with most of the claimants, Ms. Friedman estimated. The $3.2 million award is the largest sum to be paid out in the settlement process, Salomon Smith Barney said.

Salomon said it has boosted the percentage of female brokers it has hired to 35% currently from 13% in 1996, and has raised the retention percentage to nearly equal that of males. The firm also has increased the number of branch managers to 32 out of 379 from a total of just 19 in 1998. Similarly, the number of female sales managers and assistant sales managers has risen to 35 out of 349, up from 11 in 1998. "We're proud of the significant strides made in recent years," Salomon said, adding that it is "committed to giving every employee the opportunity to achieve his or her full potential."

In deciding the Keyes case, the arbitration panel found that Ms. Keyes "was subjected to a sexually hostile work environment in the Los Angeles office, including crude, offensive and derogatory sex-based behavior that served to convey insulting attitudes toward women. This behavior . . . sent a hostile message to the female employees that they did not belong to this particular workplace." During most of the events in question between 1991 and 1993, the office was part of the Shearson Lehman Brothers unit of American Express Co., whose retail brokers eventually became part of Smith Barney.

In September 1993, Ms. Keyes complained about the behavior and work environment to a human-resources consultant to the firm in New York. Specifically, Ms. Keyes noted that unlike males in the office, she was required to produce $10,000 in gross commissions per month or face termination; at the same time, many males in the office produced less than $10,000 a month, the decision said.

Although the human-resources consultant referred the Keyes complaint to another human-resources manager who interviewed the branch manger and sales manager, Ms. Keyes wasn't interviewed, and the human-resources manager didn't take any additional action, the decision said.

Initially, the firm addressed the complaint by moving Ms. Keyes to another floor. But Ms. Keyes said that didn't solve the problem because she still had to visit her previous floor, where the operations, broker "bullpen" and sales manager were located. Instead, she asked for a transfer to the Beverly Hills office, which went through in December of 1993.

At first, the decision said, the firm's management focused on her as the problem, with a regional director vowing to "play hard ball" with her. At Beverly Hills, the firm denied Ms. Keyes her own office and forced her to sit in a broker bullpen for five years even though empty offices were available, interfered with her attempts to collaborate with other brokers, refused to provide financial assistance for marketing, and gave her no accounts from departing brokers.

As a result, the panel found, Ms. Keyes was entitled to damages for "disruption of her career" by the work environment, the firm's failure to take action to correct the situation, and the "sexually discriminatory and retaliatory actions" by the firm in response to her complaints. The panel said it awarded $1.5 million in punitive damages because "if an organization continues to demonstrate tolerance of . . . sexual harassment," such a penalty may be needed "to warn that change is imperative."