Wells Fargo Advisors ended 2016 by agreeing to pay $35.5 million dollars to settle a lawsuit alleging the firm discriminated against African-American advisors, according to a document filed Dec. 30 in the U.S. District Court for the Northern District of Illinois.
The settlement also requires Wells Fargo Advisors to make a series of programmatic changes to its recruitment and training processes, teaming practices and leadership to enhance diversity and improve opportunities for African-American advisors.
Lance Slaughter filed the class-action lawsuit in September 2013, claiming he and other African-American financial advisors and FA trainees at Wells Fargo Advisors were denied business opportunities and excluded from favorable teams because of their race. The claim was amended in 2014 to include other discrimination complaints against Wells Fargo Advisors.
The class includes all African Americans who were employed as either financial advisors or FA trainees at Wells Fargo Advisors in either the Private Client Group or the bank brokerage channel at any time between Sept. 4, 2009 and Dec. 31, 2016. According to the St. Louis Post-Dispatch, at least 325 people are potential members of this class.
To satisfy the “programmatic relief” part of the settlement, Wells Fargo Advisors is required to end the practice of making new advisors and trainees reimburse the cost of their training, which can cost as much as $50,000 per year. The company must also appoint someone dedicated to recruiting African-American advisors, establish a focus group to gather feedback from minority employees, and create two coaching positions whose primary responsibility will be to work with African-American advisors and trainees.
The settlement also requires the creation of new leadership teams that include African Americans to review the company’s diversity efforts. The firm's processes to create advisor teams and select new managers will be changed to support greater diversity. Wells Fargo Advisors agreed that it would not enforce class-action waivers or mandatory arbitration agreements with respect to race discrimination or race-related retaliation claims.
Wells Fargo will need to comply with all of these for a period of four years.
Throughout the case and in the settlement, Wells Fargo Advisors denied any accusation of discrimination or wrongdoing.