The EEOC is investigating claims made by former Morgan Stanley advisors that the firm discriminated against older workers when it laid off 1,000 financial advisors back in 2005, according to a story in the Associated Press.
Should the EEOC conclude the complaint has merit, the commission will take the issue to federal court or direct the plaintiffs to pursue a case on their own. If the EEOC’s findings support Morgan Stanley, however, it will be much more difficult for the plaintiffs to win their case. The EEOC office of communication and legislative affairs could not be reached for comment.
On November 6, the EEOC (U.S. Equal Employment Opportunity Commission) sent hundreds of former Morgan Stanley reps a letter that included a five-page questionnaire, which asks for background items such as: age, 12-month production as of May 31, 2005, number of years at Morgan Stanley and years in the business. The former Morgan Stanley reps were also asked if they were replaced by someone over 40-years-old, if they had heard that people were selected for termination, and if they knew how many “rising star” brokers’ books of business were given to younger employees or new hires after they left. Brokers have until Nov. 30 to respond.
When Morgan Stanley laid off advisors in 2005, it used a formula based on production and longevity in the business. Those who were let go fell into the following categories: brokers with over eight years' experience and under $225,000 in annual production; those with five to eight years' experience and under $150,000 in production; or those with one to four years in the industry and under $100,000 in production. Christine Pollak, a spokeswoman for Morgan Stanley says all the dismissals were based solely on performance and no any other factor.
Earlier this year, Registered Rep. interviewed James Gorman, head of the firm’s Wealth management division who said the reason the firm let go of 1,000 advisors in 2005, and another 500 in 2006, was because they “had a lot of advisors who were failing terribly against any objective measure.” As of the third quarter this year, annualized revenue per FA at Morgan Stanley hit $817,000, almost double the rate in the first half of 2005 of $472,121.
Under the Age Discrimination Act of 1967 (ADEA) it is unlawful to discriminate against a person because of his age. ADEA protects people 40-years-old and over from employment discrimination. According to the EEOC website, out of the 16,548 aged discrimination charges the agency received during the fiscal year of 2006, 14,146 were resolved, and some $51.5 million in monetary benefits were recovered for the charging parties and aggrieved individuals (not including monetary benefits from litigation).