“Averting a potentially embarrassing sex-discrimination trial at the last minute, Morgan Stanley agreed to pay $54 million to settle claims from dozens of women who accused the firm of systematically denying them promotions and pay increases, and promised to institute several steps to ensure equal opportunity in the future,” writes Kate Kelly in today’s Wall Street Journal.

“The big securities firm denied wrongdoing in its settlement with the federal Equal Employment Opportunity Commission, which was wrapped up minutes before opening arguments were set to begin in the discrimination trial in a federal courthouse in downtown Manhattan. Besides the financial settlement — which includes a $12 million payment to the woman whose complaints initiated the case — Morgan Stanley agreed as part of a three-year consent decree to hire an outsider to monitor its hiring, pay and promotion practices for gender bias, field employee complaints and enhance its anti-discrimination training.”

“The case centered on how women have been treated in Morgan Stanley’s institutional-stock division since 1995. As part of its suit on behalf of about 340 current and former female Morgan employees in the department, the EEOC claimed that women were systematically held back from promotions and pay raises, and that they had endured coarse behavior and lewd comments from their male colleagues and supervisors. It also alleged that women were excluded from sales outings with clients to golf resorts and strip clubs.”

“The allegations highlighted what some critics of the securities industry say is a persistent problem on Wall Street: that women are underrepresented in Wall Street’s highest-paid, most prestigious jobs. They point to figures such as those in a report last year by the Securities Industry Association, Wall Street’s main trade group, which found that the number of women working in securities firms declined over the past four years, to 37% in 2003 from 43% in 1999.”

“During that period, the percentage of females working as managing directors, one of Wall Street’s most-senior jobs, rose to 19% from 14%. But the percentage of women in executive-management posts dropped, to 17% from 21%. Still, several top Wall Street jobs are occupied by women, including Zoe Cruz, the head of fixed income at Morgan Stanley, and Sallie Krawcheck, the chief executive and chairwoman at brokerage Smith Barney, a unit of Citigroup Inc.”

“Yesterday, the judge in the Morgan Stanley case, Richard Berman, described the agreement as ‘a watershed’ event ‘in protecting the rights of women on Wall Street.’ Elizabeth Grossman, the EEOC’s senior lawyer on the case, said she hoped the settlement would open doors for women in the securities industry with similar complaints. The agreement ‘will change not only Morgan Stanley but also send a strong message to other Wall Street companies,’ she said.”