Morgan Stanley settles sex case

Morgan could have faced tens of millions of dollars in damages

US investment giant Morgan Stanley has settled a sex discrimination lawsuit case for $54m, just as the opening arguments were due to begin at trial.

The charges had been filed on behalf of hundreds of women who complained they were denied raises and promotions and subjected to lewd behaviour.

The settlement allowed the Wall Street powerhouse to avoid a public showdown.

"This is a watershed in safeguarding and protecting the rights of women," said US District Judge Richard Berman.

The trial was based on the claims of 340 women who worked in the company's equities division since 1995.

The women claimed they were groped, slapped on the buttocks and suffered office antics such as stripteases and breast-shaped birthday cakes.

Embarrassment

The New York trial would have been the nation's first gender bias trial of a brokerage based on claims brought by the federal Equal Employment Opportunity Commission (EEOC).

"We hope that the settlement sends a message to other firms that discrimination will not be tolerated," said Judy Keenan, a lawyer with the EEOC.

The settlement will be seen as a defeat for Morgan Stanley, according to Steve Thel, a professor of securities law at New York's Fordham Law School.

"A $54m settlement is embarrassing, plus it's a lot of money," he said.

"A settlement will be viewed as an admission that they misbehaved."

Under the terms of the deal, Morgan Stanley will pay a total of $54m, $40m of which will go to the 340 claimants.

Twelve million dollars will go to resolve the claims of bond trader Allison Schieffelin, whose complaint, filed in 1998, helped launch the landmark case.

The balance of the settlement will be used to pay for anti-discrimination training programmes.