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Morgan Stanley’s Employee Arbitration Policy in Question

Monday, October, 12, 2015

Investment firm Morgan Stanley is facing a class action lawsuit that involves an unknown number of plaintiffs after accusations of racism were levied against the company. The suit claims compensation and career opportunities at the company’s wealth-management unit are based on the racial background of advisors. There are also claims the firm knowingly promotes discriminatory policies.


The suit was filed by Kathy Frazier, a former advisor with the firm and filed suit in a San Francisco federal court claiming she suffered retaliation by bringing up accusations of discrimination from her time spent with the company in Hawaii. Frazier claims she was forced to feel like she had to leave the firm.


There was an additional claim that the company’s recently instated requirement for brokers to settle employment disputes through arbitration is an “end-run around civil rights laws.” Many companies are currently under fire for arbitration requirements in contracts and some see it as an attempt to limit the options people have in filing grievances against a large company.


Morgan Stanley recently sent notice to advisors that they could opt out of the arbitration clause as long as they sent in their request by October 2nd. Those who missed the deadline are given no choice but to settle claims against the company through arbitration.


The lawsuit is requesting unspecified compensation.


Representatives from Morgan Stanley claim the suit lacks merit. They also stated the firm’s arbitration policy is not intended to and does not discriminate against employees and is intended to reduce litigation fees.