Feb 14, 2020 - Economy

#MeToo hits the banking industry

Illustration of the back of a $1 coin with the statue of liberty making a fist.

Illustration: Aïda Amer/Axios

The banking world was rocked this week with two major headlines: One, that Wells Fargo is dropping its mandatory arbitration clause for employee sexual harassment complaints; and two, that a former employee of PNC won a $2.4 million jury award in her harassment case against the bank.

Why it matters: Originally, the #MeToo movement was largely focused on the media and entertainment worlds, before migrating to technology companies. Now it looks like commercial banks are in the crosshairs, too.

Driving the news: Wells Fargo on Wednesday became the first of the big banks to say it would no longer require arbitration when employees file sexual harassment claims — a process that typically ends with the employee signing a non-disclosure agreement, meaning word of the dispute never gets out.

  • Wells, still recovering from its fake accounts scandal, said it "made the decision following internal dialogue and feedback from various stakeholders."
  • One stakeholder was Clean Yield Asset Management, which pressured the bank by putting forth a shareholder proposal to abolish the mandatory arbitration clause (now withdrawn).
  • The move may reflect that Wells' new CEO, Charlie Scharf, wants to shake things up and build a fresh corporate culture.

A New Jersey jury on Monday also determined that Pittsburgh-based PNC should pay $2.4 million to former employee Damara Scott, a wealth management professional who was sexually assaulted by a male customer. Her suit alleges that he was well-known to the bank for such behavior and that PNC refused to take action after the incident.

The bank plans to appeal the verdict. A spokesman told Axios that "PNC does not condone harassment of any kind," adding: "Current and former branch employees testified that they received sexual harassment training annually and that they did not view this customer as a threat."

  • Scott's lawyer, Nancy Erika Smith of the law firm Smith Mullin, tells Axios that the #MeToo movement has emboldened women to step forward, and that the trend is just now hitting the banking industry.
  • Since the verdict on Monday, Smith said: "I've heard from four female bankers who say they were harassed by wealth customers."
  • Scott, who joined PNC as a teller in 1998, had not been asked to sign a mandatory arbitration clause, Smith said.

Smith previously represented former Fox News anchor Gretchen Carlson in her successful suit against Roger Ailes, as well as former Fox contributor Julie Roginsky, who reached an undisclosed settlement with Fox in her suit against Ailes.

  • "I haven't seen a big dent in stopping sexual harassment in 40 years," Smith tells Axios. "When my clients complain, they are forced into arbitration."
  • Banking, she said, has been "on the fringes" of the battle against sexual harassment.

What they're saying: One lawyer who represents harassment victims, Lisa Banks of the firm Katz, Marshall & Banks, noted to Axios that ending forced arbitration for sexual harassment — which Microsoft, Google and Facebook have also done — doesn't protect victims of race, age or other discrimination.

  • "I'd like to see mandatory arbitration eliminated" for both employees and customers, Banks said.
  • Lift Our Voices — an anti-NDA group founded by Carlson, Roginsky and former Fox News reporter Diana Falzone — said of Well's move: "One major bank can inspire others in the financial sector to do the right thing."

The bottom line: Commercial banks may have avoided the #MeToo limelight so far in part because they are so highly regulated, and thus have more aggressive zero-tolerance policies.

  • "It's not enlightenment, it's compliance," Charles Wendel of Financial Institutions Consulting, which serves the banking industry, tells Axios. "They don't want to be in trouble with the regulators."
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