By Pam Martens and Russ Martens: August 19, 2019 ~
From 1976 to 1981, Jeffrey Epstein worked for the Wall Street investment bank, Bear Stearns. Epstein was found dead in his jail cell on August 10 while awaiting trial on charges of sex trafficking of underage girls, dozens of whom he allegedly sexually assaulted after grooming them first with “inappropriate touching.”
Bear Stearns collapsed in the early days of the 2008 financial crisis and was purchased by JPMorgan Chase. One of the last acts of Bear Stearns’ CEO, Jimmy Cayne, was to make a $2 million payment to a woman who charged that the legendary Chairman of Bear Stearns, Ace Greenberg, had engaged in “inappropriate touching.” The young woman was said to have had a witness to her charges.
In a 2017 report by the New York Times, a former Managing Director of Bear Stearns, Maureen Sherry, reported that “…it was mostly the same men who preyed on young women.” In a 2016 report by Maureen Callahan at the New York Post, a former Bear Stearns’ employee reports that men at Bear Stearns were “getting bl*w jobs in front of staff – that happened all the time.” Claims that men at Bear were demanding sexual favors from female colleagues and getting away with it date all the way back to the 1980s.
As more allegations emerge daily into the sexual assault horrors of Jeffrey Epstein and his band of enablers, a profile is emerging that bears a striking resemblance to how Wall Street has allowed its highest-producing brokers to behave toward vulnerable young female employees for decades. In both situations, there are the enablers; in both situations there is a failed justice system and powerful lawyers cutting deals; in both situations there are hundreds of different females asserting the same type of claims over a long period of time with no governmental authority stopping the abuse; and in both situations, powerful men who were an important cog in Wall Street’s insatiable quest for profits were allowed to walk away from a multitude of credible sexual assault allegations.
Jeffrey Epstein’s major divergence from the sexual assaults by Wall Street brokers’ is that he preyed on underage girls. It is notable, however, that many Wall Street firms hire young women just out of high school to be “trained” to work in their branch offices. The sexual grooming is not as overt as in the Jeffrey Epstein cases, where the young girls were hired to give a massage and then told, over time, the massage had to be administered by them naked; and then, after more time, upped to a full-scale sexual assault. But young women in these Wall Street offices are sent a clear message by their Human Resources departments that they need to “get along” with those big producing brokers who generate outsized profits for the firm.
Walk into any of the Wall Street retail brokerage offices that dot the landscape in every major town and city across America and you will see glass-windowed offices filled with white male brokers and pretty, young female sales assistants (a/k/a client service associates) sitting in a low-wage, subservient position at a desk directly outside that office.
Subservience to that broker is ingrained in the following ways: the sales assistant’s performance is officially evaluated by that broker and becomes a written, permanent part of her employment file; the broker, if he is a big producer for the firm, can have the sales assistant fired over any flimsy, trumped-up claim; and, importantly, most Wall Street firms pay these women low wages, leaving it to the broker they work for to give the woman a percentage of his commissions if he finds her “performance” to be to his liking.
All that Wall Street would have to do to alter these sexual and power dynamics is to pay these women a good salary and take the broker’s additional compensation out of the equation. The fact that Wall Street doesn’t alter this dynamic suggests that the industry likes its hunting band to hone their skills on the vulnerable prey in the office as a form of target practice.
Just as Epstein was able to keep his abuse hidden for decades by employing a roster of expensive lawyers who knew how to work the system, Wall Street has all of the largest law firms in America at its beck and call. These law firms have systematically convinced the U.S. Supreme Court and Appellate Courts around the country that Wall Street should be allowed to run its own private justice system; that it should be allowed to make its employees sign a waiver giving up their rights to access the nation’s courts and use Wall Street’s rigged kangaroo court system instead.
Most Americans would agree that Wall Street is the most corrupt industry in America. And yet, the most corrupt industry is the only industry that universally requires both employees and customers to waive their rights to use the nation’s courts to settle claims and, instead, must use the Wall Street-created mandatory arbitration system which has none of the procedural protections of a court of law.
What is hiding behind that rigged system of justice is akin to what happened in the Catholic Church where abusing priests were transferred from parish to parish and sexual assault claims were secretly settled with gag orders. At the hands of Wall Street and its private justice system, the media is deprived of a seat in an open courtroom; there are no publicly available court transcripts of the hearings; and the worst sexual assaults are settled quickly with a gag order on all parties. Invariably, the abusive broker keeps his job with no mark on his publicly available record about any sexual assault or sexual harassment settlement. The broker’s public record is maintained by Wall Street’s self-regulator, FINRA – the very same organization that runs the private justice system for Wall Street.
In March of last year Lorena Alcantara filed a sexual harassment claim against Michael Ladge, a high-producing broker in the Beverly Hills office of Morgan Stanley. According to Alcantara’s complaint, “Ladge’s real purpose in hiring Alcantara—a beautiful young woman in her mid-twenties at the time—was to try to exploit his power with Alcantara, to subject her to demeaning and harassing behavior, to use her beauty to attract clients, and to pursue a sexual relationship with her.” Ladge had offered Alcantara a job when he met her working as a waitress and bartender at an L.A. Sports Club. (As one of the largest investment banks on Wall Street, one would think Morgan Stanley would do its own hiring of office personnel.) Alcantara’s complaint included a sworn statement from another assistant, who corroborated much of her account.
According to a quick check at FINRA’s BrokerCheck this morning, Ladge is still employed at Morgan Stanley.
Alcantara filed her complaint in the California court system. It was, as usual, moved to Wall Street’s private justice system based on that mandatory arbitration agreement that is slipped into a stack of papers that new hires are requested to speedily sign as a non-negotiable condition of getting the job. There have been no media reports on what has happened to the case since it disappeared into the bowels of the arbitration system.
In a saner age of American jurisprudence, these types of non-negotiable contracts were found by courts to be unenforceable and ruled to be contracts of adhesion, since they were offered on a take-it or leave-it basis by the corporation. The very concept of contract law is that both parties to the contract are able to negotiate the final terms. But there is little on Wall Street today that comports with a society based on well-reasoned law. Operating its own private justice system, where arbitrators even hear rape cases, Wall Street has been able to draw a no-law-zone around its coast-to-coast offices.
In April of last year, Susan Antilla, in partnership with the Investigative Fund at the Nation Institute, looked at FINRA’s records going back 30 years. Her investigative team found that only 17 women had prevailed in all that time on their sexual harassment claims against Wall Street firms under this self-imposed private justice system. One of the cases Antilla reviewed involved an alleged rape against a young woman. Antilla reports as follows:
“In 2004, FINRA arbitrators considered a complaint against Southwest Securities, a Dallas firm, and three of its male brokers who worked at a Long Island branch. The branch sales manager, Kim Marie Vescova, alleged that one of them raped her in the office and threatened to kill her if she told anyone, according to the panel’s summary of her testimony. She also testified that the men at various times had bitten her on the buttocks, grabbed her breasts and asked for milk, and pulled down her pants.
“The arbitrators said her testimony did not prove rape, though they told the firm to pay her $300,000 in compensatory and punitive damages, plus nearly $30,000 in back pay, and ordered one of the men, Michael Aspler, then the branch manager, to pay her $100,000 for physical assault, verbal abuse, negligent supervision, and infliction of emotional distress. Contacted recently, Vescova said that after the firm had threatened to tie her up in appeals court, she settled for ‘pennies on the dollar’ on those FINRA awards. (Hilltop Securities, parent of Southwest, did not respond to a query; Aspler declined to comment.) The arbitrators also ordered the two other men, Robert Mitchell and Mark Kern — the broker Vescova accused of rape — to pay her $25,000 each for verbal abuse, assault, and intentional infliction of emotional distress. But neither paid her. FINRA suspended both of their licenses five years later — not because of what they’d done to Vescova, but for failing to pay the judgment. Mitchell and Kern did not respond to queries sent to their last known emails and addresses. Finra asks brokers to report only investment-related customer disputes to be included on their records, so the findings against the men were not detailed in their BrokerCheck records.”
Wall Street men preying on young women with impunity under its private justice system has been the bedrock of Wall Street for as long as anyone can remember. ABC’s 20/20 program brought together 17 women from coast-to-coast offices of the giant brokerage firm, Smith Barney, in 1998 to give first-hand accounts of their sexual assaults and extreme sexual harassment at a firm then headed by Jamie Dimon, now Chairman and CEO of JPMorgan Chase. Jennifer Flood told the moderator, Deborah Roberts, how she was a new young hire in Smith Barney’s Hartford, Connecticut office when one of the brokers offered to drive her to lunch. Flood stated that “He said he wanted to pull my stockings down and sit me on his lap…I jumped out of the car and ran. He caught up to me, grabbed me by the back of the neck, threatened me that I couldn’t tell anybody because no one would believe me because I was this new sales assistant that means nothing, and I’m very expendable.” After Flood filed her complaint with management, the broker continued to work for the firm.
Marianne Dalton, a new broker trainee in the Los Angeles branch of Smith Barney in 1995, also appeared on 20/20 and gave a first-hand account. The exchange went like this:
Marianne Dalton: It was like working in a male locker room. It was really degrading comments about women. They were nothing but sperm vaults, sperm banks. And I listened to this every single day. Women were referred to as bitches and whores…
Deborah Roberts: What would you say to someone who would say maybe it had nothing to do with the fact that you’re a woman, but just that you’re a new broker?
Marianne Dalton: I would ask them how they would feel if they had their boss undress every single day at the desk – every single day at 12:45, day in and day out for months, right down to his genitals?
(Dalton explained that despite there being a men’s room in eyeshot of her boss’s desk, he preferred to change into his gym clothes in front of her.)
Deborah Roberts: It’s hard to imagine this could go on in a professional office and nobody would think that this was objectionable.
Marianne Dalton: The bottom line at this firm is that they don’t want the assets to walk, so we’re going to do whatever it takes to make these senior people as happy as can be.
The supervisor Dalton had complained about was still working for the firm at the time the 20/20 program aired.
On the same program, Lisa Mays, an operations manager in the Walnut Creek, California branch of the predecessor firm to Smith Barney described how a top producing broker there, Stu Buttery, tried to rape her when she arrived at the office before other employees had arrived. Despite Mays’ formal complaints to management, Buttery continued to be allowed to work at the firm for the next 24 years.
Robin Leopold had been a Vice President of Human Resources at Smith Barney when women in coast-to-coast offices were making desperate pleas for relief from this outrageous and illegal conduct – pleas that for the most part fell on deaf ears. According to her LinkedIn profile, Leopold is back working for Jamie Dimon as a Managing Director in Human Resources at JPMorgan Chase.
The Smith Barney women organized themselves into a class action lawsuit and filed their claims in Federal Court in 1996, challenging the mandatory arbitration system as a violation of their civil rights. (See Editor’s note below.) Dimon, the New York Stock Exchange and the predecessor to FINRA, the NASD, were among the named defendants along with Smith Barney. The New York Stock Exchange and the NASD eventually dropped their own requirement that civil rights complaints had to go through the mandatory arbitration system. The big Wall Street banks’ response to that was to simply draft their own mandatory arbitration agreements that they, then and now, force all new hires to sign.
Smith Barney’s initial response to the lawsuit was to call the women “disgruntled employees” and hire a top attorney at Paul, Weiss, Rifkind, Wharton & Garrison, the same law firm that was hired more recently by Fox News parent, 21st Century Fox, to investigate the alleged sexual abuse of women by Roger Ailes.
The Paul Weiss settlement in the Smith Barney case was assailed by civil rights and employment lawyers. It ushered all claims into its own private arbitration system and extinguished all claims against the male brokers – leaving them free to assault again. It was also revealed in the press that while the case was pending before Judge Constance Baker Motley, the Paul Weiss law firm made job offers to two of the Judge’s law clerks assigned to the case.
The New York Post further revealed that the sexual harassment hotline that was ostensibly set up by Smith Barney to help women make complaints was a dud. The lead lawyer for Paul Weiss in the case, Mark Belnick, moved on to become General Counsel at Tyco International and was indicted for grand larceny and securities fraud. He was acquitted at trial but only after he had inked a retention agreement that guaranteed him a payment of at least $10.6 million should he commit a felony and be fired before October 2003. Any disputes arising out of the retention agreement matter were to be handled in arbitration rather than a court of law.
The National Organization for Women of New York State was so appalled by the terms of the Smith Barney settlement that its President, Lois Shapiro-Canter, an attorney, filed an Amicus brief with the court asking the Judge to reject the settlement. Shapiro-Canter wrote on behalf of NOW-NYS:
“Closed door proceedings and arbiters of justice chosen in part by Defendant Employer confers the appearance of impropriety and does not reflect the open door access to the judiciary of Title VII and other civil rights laws. If in fact Defendant Employer intends in good faith to proceed wholeheartedly with the diversity plans outlined in the agreement, why does it need a mandatory arbitration process a/k/a mandatory alternative dispute resolution system which denies women and minorities their constitutional right to access the courts to ensure freedom from discrimination and sexual harassment?”
When Epstein’s powerful lawyers cut his plea deal with Federal prosecutors in 2008, the Palm Beach police had credible evidence that Epstein had sexually assaulted dozens of underage girls at his home in Palm Beach. The police had even asked the FBI to investigate. But the Federal government left Epstein off with a single count of soliciting sex from a minor and one count of soliciting prostitution from an adult. His 13 months of jail time consisted of being ferried by his private driver and limo to an office where he spent 12 hours a day on a so-called work release program. According to the New York Times, “When Jeffrey Epstein was serving time in Florida for soliciting prostitution from a minor, he got a surprising visitor: James E. Staley, a top JPMorgan Chase executive and one of the highest-ranking figures on Wall Street.” Staley wanted to keep his relationship with Epstein, according to the Times, because “Epstein had funneled dozens of wealthy clients to Mr. Staley and his bank.”
This is precisely the same motive that keeps the big producing brokers safe on Wall Street.
Editor’s Note: Pam Martens, the co-author of the above article and Editor of Wall Street On Parade, worked for two major Wall Street firms for 21 years. During that time, from 1996 through 2001, Martens challenged Wall Street’s mandatory arbitration system and the sexual assaults and sexual harassment of women facilitated under that system in the U.S. District Court for the Southern District of New York and at the 2nd Circuit Court of Appeals in a case titled Martens v Smith Barney in which she originally served as lead plaintiff. The settlement fashioned by plaintiffs’ attorneys and Paul Weiss was deemed so conflicted by Martens that she withdrew from the settlement and never profited from the settlement or any subsequent payment from the parties. Her original co-plaintiff, Judy Mione, joined her in withdrawing from the settlement for the same reasons. Martens also appeared in the ABC 20/20 program referenced above.