Another Tale from Boom-Boom Room: Smith Barney Down WSJ

Smith Barney, the brokerage unit of the financial octopus known as Citigroup, must be wondering when talk of the infamous “Boom-Boom Room” will finally cease and desist.

The firm is still putting out public-relations fires related to the 1998 sex-discrimination settlement reached with women employees of the “Boom-Boom” era, as arbitration hearings lurch forward for women who filed individual complaints after the settlement was signed. But the company is eager to keep the embarrassing details from being made public, and is now attempting to gag two reporters who are trying to obtain a copy of an arbitration-hearing transcript.

Two members of the press were invited to attend the arbitration hearing for Neill Sites, which ran from July 11 to July 15 in Atlanta. Ms. Sites was an institutional sales broker for 12 years in the Atlanta office of Robinson-Humphrey (which became a subsidiary of Smith Barney through a series of all-consuming mergers), and filed a discrimination claim against the company in 1998. As dictated by the Boom-Boom settlement, her claim was pushed through an “Alternative Dispute Resolution” process, eventually landing in arbitration. The rules for the arbitration had been clearly laid out in legalese: the hearing was described as “public,” was to be overseen by a panel of three people, and two members of the media were allowed to attend so long as the claimant didn’t object. (She didn’t.) A final ruling on the case is expected by the end of September.

One of the reporters invited to attend was freelance journalist Susan Antilla, a longstanding bête noire to the investment banks, and the author of an entire book about the Boom-Boom Room, its lap dances and vats of liquor, and the insults and abuse suffered there by many Smith Barney women. The other was Carrick Mollenkamp, an Atlanta correspondent for The Wall Street Journal and the only member of the press to actually attend any of Ms. Sites’ hearing.

But because Mr. Mollenkamp was only present for part of the five-day hearing, he has been unable to write a story about the hearing without an important tool necessary to confirm details of the proceedings: the transcript. Writing a story based on the days when he was present, with an incomplete picture of the overall proceeding, would leave him open to charges of inaccuracies from Smith Barney.

After the hearing concluded, Ms. Antilla requested a copy of the transcript and exhibits from Ms. Sites’ attorney, Daniel Klein, who sent an e-mail to Smith Barney’s lead attorney in the case asking if he objected. Mr. Mollenkamp also requested a copy of the transcript from Mr. Klein.

G. Wayne Hillis, Smith Barney’s outside lawyer, responded with an e-mail that said: “Smith Barney objects to you giving the transcript and exhibits to Ms. Antilla or anyone else. The transcript and exhibits are confidential.” The Smith Barney lawyers followed up with a long e-mail to the arbitration panel requesting that they bar Mr. Klein from releasing the transcript. The lengthy objection allows that while a section in the settlement “states that the hearing shall be open to the public, it does not provide for the publication of the hearing transcript or exhibits.” It goes on to say that “providing the transcript to reporters who did not attend clearly could effectively thwart the Settlement Stipulation’s prohibition against more than two members of the press attending.” It does not address the fact that one of the members of the press requesting a transcript, Mr. Mollenkamp, actually did attend, albeit only in part.

Ms. Antilla said that she attempted to join forces with Mr. Mollenkamp in reminding Smith Barney that the hearing was supposed to have been “public,” but after a certain point the Wall Street Journal reporter let the issue drop.

“I think he had some understandable concerns about whether we were competing on this story,” said Ms. Antilla, who freelances for The New York Times , New York magazine and the Sunday Times of London . “The first thing we want to do is get the documents out there. I didn’t see us as competing, we just really needed to get the documents. I had a long term interest in this story, it’s something I’ve looked at for 10 years, I wasn’t going to write a breaking news story. Then I didn’t hear from Carrick again. I e-mailed the Reporters Committee for Freedom of the Press, explained who I was, and asked for help, but I didn’t hear back from anyone. I e-mailed someone at Investigative Reporters and Editors, but didn’t hear back in any timely way. I was sort of sitting here thinking, I don’t have any news organization in back of me, but somebody’s got to see to some kind of precedent here.”

Which has left both journalists facing the banking giant separately. Ms. Antilla found a lawyer, Robert Bertsche, who has filed a response to the objection for a nominal fee, which she is paying out of her pocket. Mr. Mollenkamp and Dow Jones declined to comment. It is unclear whether the arbitration panel will release the transcript, or respond at all, before the expected end-of-September ruling on the case.

Ms. Antilla and Mr. Mollenkamp have somewhat of a history, which might provide some insight into Smith Barney’s media hypersensitivity. According to Ms. Antilla, on the eve of an earlier Smith Barney arbitration in Atlanta (that of former broker Susanne Pesterfield), the plaintiff’s lawyer (also Mr. Klein) asked Ms. Antilla for suggestions of reporters to invite to sit in, since Ms. Antilla was not able to attend. Ms. Antilla recommended Susanne Craig of The Wall Street Journal . It was ultimately Mr. Mollenkamp, one of the Journal ‘s Atlanta correspondents, who covered the story. The case was abruptly settled before the arbitration began, shortly after the reporter started making inquiring phone calls. (Eleventh hour settlements are typical in these cases, as evidenced by Morgan Stanley’s hurling of $54 million at Allison Schieffelin on the morning her own discrimination trial was to launch in a Manhattan courtroom.)

“I asked him what had transpired right before the scheduled hearing,” said Ms. Antilla, referring to the earlier Pesterfield case. “And basically the bottom line was, Carrick started making phone calls about the arbitration hearing that was coming up, and suddenly the settlement happened. I asked him if he thought the settlement was related to his reporting, and he said, ‘it definitely had an impact, the arbitration would have happened if I wasn’t going to be there.'”

Mr. Mollenkamp would not confirm Ms. Antilla’s account, and representatives for The Wall Street Journal declined to comment.

The Neill Sites complaint is lacking the strip club romps and dildos-on-desk incidents that have made for juicy headlines in many other Wall Street discrimination cases. Rather, it reads like a grim tale of discriminatory politicking and sabotage. The complaint describes Ms. Sites’ 12 years as a broker within a three-person group serving approximately 70 accounts such as fund giants Fidelity, Pioneer Management and State Street Research. In 1995, after Ms. Sites had been with the firm for 10 years and was generating substantial commissions, a new third member named Burton Vance joined her group. Mr. Vance was quickly promoted, and within two years was drawing the same proportion of the group’s income as Ms. Sites, who had been with the firm for 11 years and was producing more commission than the group’s other two members. At one point, the claim describes the incompetence of Ms. Sites’ group head, who sent faxes to a client who had been dead for a year. The complaint also asserts that Ms. Sites’ lucrative accounts were unfairly transferred away from her to less experienced male brokers (which her clients protested), that she was refused promotion to vice president (until after the same Mr. Vance was made V.P. after two years on the job), and that Ms. Sites was excluded from important analyst lunch meetings.

“I think the record in this case contained some very clear evidence of sex discrimination that any employer would prefer not be made public,” said Ms. Sites’ attorney, Mr. Klein. “We’ve gone on record saying that the panel doesn’t have the right to restrict what we do with the transcript. But the panel has asked us not to give the transcript out until they rule on the issue. Ms. Sites thinks it’s a matter of public concern, so she has asked for permission to release the transcript to Susan and the Wall Street Journal, at a minimum so that reporting on what happened at the hearing can be as accurate as possible.”

Without press coverage of the arbitration hearing or access to the transcript, however, it’s impossible to assess Smith Barney’s redress of Ms. Sites’ allegations. Calls to Smith Barney’s outside counsel G. Wayne Hillis and in-house counsel Andrew Upton were not returned. A Smith Barney spokesperson said that “while reporters are able to attend arbitrations in person, transcripts are not public documents.”

Mr. Klein is hopeful that the panel will rule on the transcript issue before issuing a final ruling on Ms. Sites’ case.

“You have to ask yourself, what’s the big deal?” said Ms. Antilla. “What is Smith Barney’s objection? Obviously they want to keep this as tight as they can.”