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Morgan Stanley Facing New Racial Bias Claims

SAN FRANCISCO (CN) - A class action lawsuit claims Morgan Stanley is still denying black financial advisors equal pay and opportunities, despite its recent extension of a 2008 settlement agreement over similar claims.

Kathy Frazier, a former Morgan Stanley financial advisor, sued the company for race discrimination, retaliation and beach of contract Thursday.

Frazier claims the financial services titan has "no genuine intent" to reform its practices or abide by the spirit of settlement agreements reached in race and gender discrimination suits filed in 2006.

The plaintiff, who left Morgan Stanley in 2013, says she and other black employees were excluded from lucrative financial advisor teams and denied opportunities to take over highly profitable client accounts.

Last month, the company sent employees an email about extending parts of the 2008 Jaffe v. Morgan Stanley race discrimination settlement. Within the attached disclosure was a notice on page 19 of 22, stripping employees of their rights to pursue class action discrimination claims in court, Frazier alleges.

She describes the memo as "a calculated attempt by Morgan Stanley to continue its rampant discrimination in private and without challenge or accountability in the court or notice by the investigating public. "

In a statement, Morgan Stanley said the lawsuit has no merit and that its decision to allow employees to pursue their claims through "professional unbiased arbitrators," instead of through the courts is encouraged by federal law.

"In truth, the only people disadvantaged by this program are the class action lawyers looking to maximize attorneys' fees through protracted litigation," a Morgan Stanley spokeswoman said.

Frazier's experience

After earning an MBA from the University of Pennsylvania and gaining substantial experience as a financial advisor at Goldman Sachs and Merrill Lynch, Frazier was recruited to join Morgan Stanley in 2007.

Throughout her employment, Frazier says she was excluded from favorable advisor teams and blocked from taking on lucrative account transfers when other financial advisors retired or left the firm.

Frazier says the company retaliated against her after she complained about the treatment, but her lawsuit lacks specifics on the alleged retaliation.

She says her requests to see actual account redistributions were "flatly denied" by managers, violating the terms of the Jaffe settlement agreement.

After Frazier left the firm in 2013, she filed complaints with diversity monitors assigned by the court under the Jaffe settlement agreement but no investigation took place, she says.

Frazier also filed a complaint with the diversity monitor assigned from a separate gender discrimination settlement in Augst-Johnson v. Morgan Stanley, but no corrective action was taken, she claims.

Although she was a class member in both settlements, she received no relief from the discriminatory policies and practices, according to the complaint.

"Not only did plaintiff receive no benefit from the settlements, she was affirmatively harmed by the firm's flouting its obligations and its refusal to comply with the court-ordered programmatic relief," the 16-page complaint states.

Frazier seeks a declaration, class certification, lost compensation and benefits, punitive damages and an injunction to stop Morgan Stanley from implementing mandatory arbitration and class action waivers for discrimination claims.

On Sept. 30, Senior District Judge Thelton Henderson approved a two-year extension of the Jaffe settlement agreement, which dealt with claims of discrimination against African American and Latino employees.

Morgan Stanley employs more than 16,000 financial advisors nationwide and managed $2 trillion in client assets in 2014 with a 20 percent profit margin, according to the complaint.

Frazier is represented by Sharon Vinick of Levy Vinick Burrell Hyams of Oakland and Suzanne Bish of Stowell & Friedman of Chicago.

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