By Pam Martens: April 17, 2018 ~
As women in careers as disparate as Hollywood movie stars, television news anchors and members of Congress have fueled the #MeToo movement and spoken out against America’s workplace culture that tolerates sexual harassment and assault in the workplace, the silence from women on Wall Street has been deafening.
Some reporters who have written about the silence have speculated that Wall Street has cleaned up its act, owing to the big class action lawsuits that were brought in the 1990s against some of the largest and oldest Wall Street brokerage firms. (See my Editor’s Note below.) Wall Street women’s detailed court complaints in the 90s described lewd acts during the workday (such as the hiring of strippers) or at company-sanctioned holiday parties (like having a camera shoved under a skirt to take a picture). There was also the endless degradation of women on Wall Street through sexual objectification in front of peers. One female broker was described by her male colleagues as “slits and tits” while the legal defense strategy on Wall Street was internally known as the “nuts or sluts” defense, that is, portray the complaining woman as a nut or a slut.
Tragically, the silence now coming from Wall Street women is not the result of Wall Street taking these lawsuits seriously. Instead, Wall Street has simply beefed up its legal enforcement of non-disparagement agreements and prohibits employees from speaking with the press. But more ominously, Wall Street makes mandatory arbitration agreements a condition of employment. Mandatory arbitration, run by the deeply conflicted self-regulator of Wall Street, FINRA, is more akin to a kangaroo court than the nation’s courts. Feminist Gloria Steinem called the system “McJustice.” Arbitrators are allowed to dispense with legal precedent, case law and place severe restrictions on discovery. The press and the public are not allowed to attend the arbitration hearings. Appeals to a court of law are next to impossible unless there is a mountain of evidence showing fraud in the proceeding.
Today, Bloomberg News is reporting that Senator Elizabeth Warren received a response to her inquiry to FINRA regarding the prevalence of sexual harassment on Wall Street today. The self-regulator reported that it had reviewed 1.1 million termination notices over an eight-year period between 2010 and 2018. It found just four brokerage terminations that reference sexual harassment or suggest it might have been the cause of termination.
We tried something a little different here at Wall Street On Parade. FINRA makes the rulings of its mandatory arbitration tribunals public. Although the skimpy decisions compare to a Federal judge’s reasoned opinions in much the way that a Matchbox toy car relates to a John Deere tractor, we used the search word “sexual” (short for “sexual harassment”) and combed through cases dating back to 1989. There were a preposterously few cases showing the term “sexual harassment” for a span of more than a quarter century on Wall Street, suggesting that the arbitration chair may have been deterred from using this term by one of Wall Street’s many unwritten rules.
We did, however, stumble upon the arbitration decision in the FINRA archives for a claimant by the name of Helen L. Walters. This case was filed with the NASD’s arbitration system (the predecessor to FINRA) on February 5, 1991. Wall Street’s legions of big law firms have argued before Appellate Courts and even the U.S. Supreme Court that arbitration is fair, fast and cheap. But Walters’ case wasn’t decided until October 8, 1992, more than a year and a half after it was filed. Unlike a description of the complaint that one would find in the Federal Court system, the arbitrators offered one single sentence to describe Walters’ complaint. It read: “Registered representative (former employee) alleges member firm and registered representative engaged in sexual harassment.”
The arbitrators found against Walters and dismissed her claims entirely with no explanation as to how they reached this decision. That would have been all the public ever knew about the living hell that Helen Walters had endured on Wall Street were it not for a Wall Street Journal reporter named Margaret Jacobs. On June 9, 1994, Jacobs reported the following to stunned readers across the country:
“Helen L. Walters says her boss called her a ‘hooker,’ a ‘bitch’ and a ‘streetwalker.’ Sometimes he brandished a riding crop in front of her and once he left condoms on her desk.
“Ms. Walters, then a trading-room secretary at a California brokerage firm, filed a complaint against him alleging sexual harassment. In a formal hearing, he readily admitted to the whip and the condoms, and to using all of those epithets. Her case, legal scholars agree, seems a textbook example of illegal harassment as defined by the Supreme Court: a situation in which a ‘reasonable person’ would find the work environment ‘hostile or abusive.’
“So why did Ms. Walters lose?
“Ms. Walters slammed into a little-known, but extraordinarily daunting, roadblock facing many women in the securities industry: Bias complaints, like any other employee dispute, must go through the industry’s mandatory-arbitration system. That means victims’ complaints can’t be heard in court by judge or jury, no matter how strong their merit.”
Wall Street is the only industry in America that is allowed to run its own private justice system to hear civil rights claims such as sexual harassment and sexual discrimination. It has gotten away with this because those same Big Law firms that control campaign finance laws, recommend new appointees for Federal judges, and have lobbyist teams to make sure Congress keeps mandatory arbitration in place, desperately need those billable hours to Wall Street. But this is nothing more than a protection racket perpetrated by so-called iconic white shoe law firms and a perversion of the Civil Rights Acts of 1964 and 1991. As we wrote last year:
“These legislative acts, passed by both houses of Congress and signed into law by the President of the United States, provide civil rights protections in the workplace including anti-discrimination statutes and court remedies to stamp out sexual predators who use their position of superior rank to sexually harass colleagues.
“The legislation confers on the private litigant the role of private attorney general to pursue not only her own claim but to vindicate the rights of other women to a workplace free of harassment and discrimination. The Equal Employment Opportunity Commission (EEOC), the Federal agency that enforces the civil rights acts, has filed amicus briefs with appellate courts, outlining the importance of the private litigant’s role in functioning as a private attorney general on behalf of society as a whole.
“In a 2003 paper, Stanford Law Professor, Pamela Karlan, explained the critical role that these private attorneys general can perform on behalf of society. Karlan writes: ‘The idea behind the ‘private attorney general’ can be stated relatively simply: Congress can vindicate important public policy goals by empowering private individuals to bring suit…Virtually all modern civil rights statutes rely heavily on private attorneys general…Congress harnessed private plaintiffs to pursue a broader purpose of obtaining equal treatment for the public at large.’
“Karlan goes on to explain that when the plaintiff is denied her day in court, the important public policy enshrined by the civil rights acts goes unvindicated, and the entire Nation suffers.”
Are there still women like Helen Walters suffering humiliating sexual harassment on Wall Street in order to pay their bills and put a roof over their head? We found a frightening FINRA claim from a woman that was filed in the last two years. The woman claimed: “physical and sexual assault/battery & false imprisonment; sexual harassment; intentional infliction of emotional distress; breach of industry standards of commercial honor and principles of trade pursuant to FINRA Rule 2110.”
Like Walters, the arbitrators dismissed her claims in their entirety. But then they did something else: they assessed her with $7700 in hearing session fees; $1800 for two postponements; and a $2,000 initial claim filing fee.
We’ll be looking into this matter further and we would urge Senator Elizabeth Warren to do the same.
Editor’s Note: The Editor of Wall Street On Parade, Pam Martens, was the lead named plaintiff in a high profile Federal class action lawsuit filed in 1996 which sought to overturn mandatory arbitration on Wall Street for civil rights plaintiffs and shine a bright light in the public courtroom on the egregious sexual harassment and sexual assault experienced by women on Wall Street. Martens walked away from the settlement that was crafted by attorneys for the plaintiffs and the defendants, which enshrined gag orders and left mandatory arbitration in place on Wall Street.