Five Years After #MeToo, Wall Street’s Culture of Secrecy Makes Progress Hard to Measure

Arbitration and non-disclosure agreements have long kept sexual misconduct claims on Wall Street out of the spotlight. New legislation, coupled with a major class-action lawsuit, could change that.

A bronze statue of a girl with her hand on her hips is pictured in front of the New York Stock Exchange.
Fearless Girl, a bronze sculpture by Kristen Visbalthe, in front of the New York Stock Exchange. Photo by TIMOTHY A. CLARY/AFP via Getty Images

More than 20 years before the #MeToo movement began, a lawsuit filed by female employees at Smith Barney, a brokerage company, shed light on Wall Street’s hard-driving, misogynistic culture.

“There must be a lot of pressure on you to spread your legs,” a branch manager at Smith Barney allegedly told a female broker, leaving her in tears, according to a class-action lawsuit filed against the firm in 1996. The same manager reportedly set up a frat-party style room in the basement of Smith Barney’s Garden City, Long Island office, where he would serve male colleagues Bloody Mary’s, and joke about sending down female employees to be “dealt with.” The lawsuit alleged the firm engaged in a “practice of discriminatory conduct” against female employees, systematically denying them better wages and new opportunities, including promotions.

The case, known as the “boom boom room” lawsuit, referring to the basement where the firm’s male employees gathered, was a watershed moment for the finance industry. Smith Barney ultimately paid $150 million to settle, according to the women’s lawyers, and through the settlement agreed to spend $15 million on diversity training, as well as reform its mandatory arbitration process so sexual misconduct claims could be settled by an outside mediator. In the years that followed gender discrimination lawsuits filed by female employees at Merrill Lynch and Morgan Stanley brought further attention to some of the ugly realities of being a woman at these institutions.

By the time the New York Times’s bombshell 2017 investigation into Harvey Weinstein brought these issues into sharper focus for workplace leaders across the country, Wall Street had been reckoning with them for years. Still, the response from the finance industry was relatively muted. Veterans of the industry say its culture of secrecy has continued to keep women from speaking out. Some say #MeToo had the effect of steering banks in the wrong direction, as they imposed strict policies that actually made the industry more isolating, while focusing on metrics to distract from the fact that the highest revenue-generating ranks of Wall Street remain dominated by men.

Five years after the #MeToo movement began, progress across most industries has come in fits and starts. On Wall Street, new laws targeting mandatory arbitration and non-disclosure agreements—as well as a class-action gender discrimination lawsuit against Goldman Sachs (GS) set to go to trial next year—have turned attention once again to the question of whether big banks can meaningfully welcome more women into their ranks.

#MeToo’s impact on mentorship and metrics

Though more than 200 powerful men lost their jobs in the first year after the #MeToo movement began, these resignations or terminations were concentrated in media, entertainment, and politics, according to the New York Times. Few, if any, came from Wall Street, but the movement still put finance executives on high alert. A year into #MeToo, some banking executives started to course-correct by avoiding one-on-one meetings or dinners with their female colleagues out of fear they would be accused of harassment, Bloomberg reported.

Anne Clarke Wolff, a former Bank of America and JPMorgan executive who now runs her own investment firm, Independence Point Advisors, said she believes this trend has been damaging to women seeking to get ahead in the industry, given its strong emphasis on apprenticeship. “When you lose out on the opportunity to be in the room where it happens with the male senior banker or the male CEOs, you de facto have just moved three steps further behind,” Wolff said. The #MeToo movement has done “permanent, almost irreparable damage” to the kind of mentoring she received early in her career, she added.

“It’s really depressing to me to think that it’s been five years since #MeToo because the progress that we’ve made is so minor in terms of what the upside opportunity was,” she said.

Ridha Mirza, who interned at Morgan Stanley the past two summers, said her experience was positive precisely because she wasn’t mentored by a man. While at Morgan Stanley, Mirza was involved in a women’s group focused on wellness, and had female managers. She said other friends on Wall Street who didn’t have mentors with whom they identified struggled. “I think it’s difficult when you don’t see anyone who looks like you.”

Still, Mirza acknowledged that most of her colleagues didn’t look like her, an Indian-American woman. Wall Street remains dominated by white men, a characteristic big banks have sought to address in the #MeToo years. Goldman Sachs has said it wants half of its entry-level hires to be female, and appointed the most women ever to its 2022 partner class this year. But the class is still just 29 percent female, suggesting the most elite ranks of the bank remain a boys’ club and far from representative of the U.S. labor force, which was 47 percent female in 2021. Similarly, about 29 percent of executive or senior officials and managers at JPMorgan Chase were women last year. At Citibank, the only big bank with a female CEO at the helm, 36 percent of top-level executives were women last year.

Because women on Wall Street are promoted less frequently than men, they’re also paid less. While big U.S. banks have resisted shareholder proposals to publish pay data, figures from the U.K., where disclosing such information is required, offer insight into how these disparities play out. The median female employee at U.K. banks made 30.5 percent less than what her male colleague made in 2020, according to a PwC analysis, compared to a 12.1 percent pay gap nationally.

Wolff, of Independence Point Advisors, said she worried big banks focused too much on metrics, and points to strong female representation in support roles such as human resources, marketing, and compliance, rather than roles where employees really bring in money. “It starts to become a little bit more about checking the box,” she said. “They tend to beef up the numbers in those areas and think that they get a hall pass on frankly, the lack of representation in the key revenue seats.”

Allison Gamba, one of the plaintiffs suing Goldman for gender discrimination, expressed similar frustration that the bulk of women at big banks tend to be concentrated in non revenue-generating roles. “They check a box, and find a way to kind of move it around,” she said.

A boys’ club shrouded in secrecy

Part of the reason it’s hard to measure progress for women on Wall Street is because banks remain shrouded in secrecy, with mechanisms such as arbitration and non-disclosure agreements that keep employees from speaking out about harassment, and the resources to fight those who do.

“The problem is you don’t want to combat them too much because you don’t want to sound ungrateful,” said Gamba, who was a trader at Goldman Sachs from 2001 to 2014. “You’re sitting there trying to get a promotion.” During her time working for Goldman’s New York Stock Exchange Equities Department, she was promoted just once, to vice president, Gamba alleges in the complaint filed against her former employer.

Goldman Sachs logo pictured underneath trading information.
The Goldman Sachs trading area on the floor of the New York Stock Exchange. Photo by Ramin Talaie/Corbis via Getty Images

Gamba said her male manager told her he was going to nominate her for managing director, one of the highest ranking positions in banking, at a retirement party back in 2007. While the two were chatting, she said he told her she should consider adopting, instead of becoming pregnant. Gamba, who had never discussed any plans to have a family with her colleagues, escalated her concerns about the comment to more senior management, and was treated negatively thereafter, even though she requested the concerns remain confidential. After that, she said she was continuously denied promotions even as she brought in millions of dollars for the bank.

In 2008, Gamba said she brought in $9.5 million, even though she had her first child and was on maternity leave for part of that year. Gamba believes she was among the top five performers in her division that year, and the average revenue for about half the traders in her division was $1 million annually. A male colleague whose trading performance was worse than hers was promoted to managing director, she said. She is one of just four named plaintiffs named in the lawsuit, which seeks damages for women who they say were systematically paid less than their male peers, as well as given weaker performance reviews. The lawsuit also challenges Goldman’s promotion practices, arguing they systematically disadvantage women.

“The Plaintiffs’ presentation of the complaints does not reflect reality at Goldman Sachs. Many are two decades old and have been presented selectively, inaccurately and are incomplete,” a Goldman Sachs spokesperson said in an emailed statement. “Discrimination, harassment and mistreatment in any form are unacceptable at Goldman Sachs, and when identified, swift action, including termination, is taken.”

Michelle Lamy, one of the lawyers representing the plaintiffs, said arbitration has kept more women from taking part in the Goldman gender discrimination case. Like many big banks, Goldman requires employees to sign arbitration agreements that keep claims from going to trial before a judge and jury. Although 3,322 women were originally part of the class being represented by the lawsuit, Goldman successfully cut the class by more than half by compelling arbitration, Lamy said.

A recent settlement reported by Bloomberg showed just how far Goldman may be willing to go to keep employees’ claims about sexism and gender bias out of the public. Two years ago the bank reportedly paid a former female partner $12 million to keep an internal complaint she made about Goldman’s alleged mistreatment of women quiet. The settlement is thought to be among the largest of such payouts on Wall Street. In an emailed statement Kathy Ruemmler, general counsel at Goldman, said Bloomberg’s reporting contained “factual errors.”

“While the #MeToo movement helped in terms of getting people to publicly share their stories, there has still been a disconnect when it comes to accountability, because the banks still use all of their tools to keep lawsuits from happening,” said Lamy.

Arbitration ban, lawsuits open up possibilities for more accountability

Along with the Goldman trial, set to begin trial in June, 13 years after the class-action lawsuit was first filed, another high-profile case could open up Wall Street to further scrutiny. Next year, Sara Tirschwell will have her day in court, more than four years after she sued TCW , an investment management firm, alleging she was fired after complaining her former boss pressured her to have sex in exchange for supporting her distressed debt fund.

In the meantime, legal advocates who support plaintiffs in these cases hope a federal ban on mandatory arbitration could prompt institutions to rethink how they treat these claims. This law, signed by President Joe Biden in March, prohibits employers from forcing sexual harassment or assault claims into arbitration.

Gretchen Carlson shakes President Joe Biden's hand in front of a U.S. flag.
Former Fox news anchor Gretchen Carlson attends the signing of a law banning forced arbitration that was signed earlier this year. Photo by Anna Moneymaker/Getty Images

It’s not clear how significant the impact of this law will be in the finance industry. The legislation only applies to a limited scope of claims, and may be tricky to enforce for cases that occurred prior to when the legislation was signed, employment lawyers say. But Jeanne Christensen, a partner at employment firm Wigdor, believes the law will compel companies to address troubling behavior before it gets to court, as they can no longer hide as easily behind arbitration agreements.

“Historically, the process of change in our legal system is not swift, but it is moving, and it’s moving forward towards transparency,” she said. A more recent bill limiting the use of non-disclosure agreements in sexual misconduct cases could further tamp down on employers’ efforts to keep these claims quiet. Biden is expected to sign the bill, which was passed by Congress this month, into law.

Just because gender discrimination and harassment claims on Wall Street haven’t been highly publicized doesn’t mean women have continued to stay silent, said Lauren Bonner, a managing partner at MBM Capital. Bonner sued her former employer, Point72 Asset Management, for gender discrimination and unfair pay practices in 2018 (the firm settled with Bonner in 2020). She said she’s heard through finance employees and lawyers that a lot more women have started to come forward in recent years.

“It’s harder to see the activity around women speaking up, because so much of it is really cut behind closed doors,” Bonner said of the finance industry. “Because people can’t be quite as public about it, there’s a perceived lack of momentum which is not necessarily accurate.”

Movement prompts new questions for female graduates

In recent years more women have started to pursue business degrees, and in 2021 the share of women enrolled in full-time MBA programs hit 41 percent, a record, according to the Forté Foundation, an organization that offers fellowships to women pursuing a business education. For female students considering finance careers, the question of how banks treat women in their ranks can loom large in their decision-making.

Banks have always tried to court women from business schools into their ranks, according to Abigail Kies, an assistant dean of career development at the Yale School of Management. She said these efforts have only intensified in recent years as investment banks have stepped up their diversity recruiting, in some cases giving students internship offers before the school year even begins. While Kies hasn’t noticed a major change in the share of female MBA students who are interested in pursuing a finance career, she said the #MeToo movement appears to have galvanized these students to ask more pointed questions about the culture at the firms that are recruiting them.

“They’re not just being swayed by what kinds of deals the bank is doing, or the prestige necessarily,” Kies said. In some cases, students will finish summer internships at banks and realize the culture or mentoring opportunities aren’t a good fit for them. In the case of female students pursuing finance careers, their judgment might hinge on whether there are senior women at the bank they’d want to be mentored by, she said. In other cases, they might see behavior by senior female executives at the firms where they intern that turns them off.

Ultimately, Kies said, the #MeToo movement has empowered female students pursuing finance to think not just about landing a job, but where they land a job. “They’re prioritizing different firms based on their experiences of the culture,” she said.

Five Years After #MeToo, Wall Street’s Culture of Secrecy Makes Progress Hard to Measure