Race discrimination lawsuit
JPMorgan Chase (JPM) has settled a class-action lawsuit filed by a group of black financial advisers who alleged racial discrimination. Bloomberg, the financial data and news provider agency, revealed yesterday that six of the bank’s current and former employees had filed the lawsuit.
The court documents alleged that the nation’s largest bank is indulged in “systemic, intentional race discrimination” since it assigns lucrative assignments to white advisers while assigning less profitable branches to black advisers. Citing court documents, Bloomberg stated that the company “had few licensed bankers to support them, were mostly kept out of a program for richer clients and got paid less.”
To avoid litigation, JPMorgan agreed to pay $19.5 million to the six employees who filed the lawsuit. It will also create a $4.5 million fund to support unbiased recruitment, training, a review of branch assignments, and coaching programs for black financial advisers.
On the matter of race discrimination, JPMorgan spokesperson Thomas Kelly said, “This settlement eliminates the need for litigation, allowing us to continue our focus on a diverse and inclusive environment. We will enhance the careers of our black advisers.”
Banks lack gender diversity
For the past few years, US banks have been criticized for their lack of policies for hiring, promoting, and retaining black talent. Citing JPMorgan’s report on gender diversity released in June, Bloomberg noted that the number of black employees in the company fell for the sixth consecutive year in 2017. According to the report, the percentage of black employees was 13.4% in 2017, down from 16% in 2011.
Some of the other major US banks have lower numbers. In 2009, one in six employees were black at Citigroup’s (C) US offices. At the end of 2017, that number was only one in ten.
The problem is widespread in the entire banking industry. At Goldman Sachs (GS), only 5.4% of the total US workforce is black. Black employees make up 13% of the entire US workforce at Wells Fargo (WFC).
The iShares U.S. Financial Services ETF (IYG) has allocated 12.2% of its funds to JPMorgan stock.