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Women in North America held only 21% of senior leadership jobs in financial services in 2022, according to the consulting firm Deloitte, which projects that number will reach only 22% by 2031.
This article was produced by Capital & Main, an award-winning publication that reports from California on economic, political, and social issues. It is co-published here with permission.
Seven months after a historic settlement between Goldman Sachs and a group of women who sued the financial giant for pay discrimination, not much seems to have changed on Wall Street. As part of the $215 million deal, approved on Nov. 7 by U.S. District Court Judge Analisa Torres, the firm will pay about 2,800 women who worked in Goldman’s investment banking, investment management and securities divisions from as early as 2002 to 2023.
“My goal in this case has always been to support strong women on Wall Street. I am proud that the result we achieved here will advance gender equity,” plaintiff Allison Gamba said in a prepared statement.
The large settlement and grand ambition notwithstanding, serious challenges persist for women who work in finance. Women in North America held only 21% of senior leadership jobs in financial services in 2022, according to the consulting firm Deloitte, which projects that number will reach only 22% by 2031. And Payscale.com found earlier this year that of the 15 industries in the U.S. that it analyzed, finance and insurance had the biggest average pay gaps, with women making 77 cents for every dollar made by men. That’s up just a penny from 2020, when women were making 76 cents for every male dollar.
And cases citing egregious behavior keep making headlines. In a complaint filed in federal court in Manhattan on Nov. 20, a female managing director at Citigroup Inc. described a “locker room environment” where women were pressured to go to strip clubs and men “openly discussed with each other which female employees they wanted to have sex with.” The plaintiff, Ardith Lindsey, said she broke off an abusive relationship with a senior Citi executive only to have him bombard her with texts that included threats to her and her children. Like Goldman, Citigroup has boasted publicly of its dedication to diversity in the workplace.
A spokesman for Goldman referred Capital & Main to several public documents on the internet including its 2022 “People Report” that reveals men make up 75% of its executive/senior officials and managers. A Citigroup spokesperson said the bank will defend itself against the claims in court, adding that “our values and expectations are clear—no one should ever be discriminated against or harassed in the workplace” and that employees should be confident that decisive action “must be taken” when bad behavior takes place. He added that the conduct of the senior executive as detailed in the complaint was “deplorable,” and that Citi immediately put the man on leave and began an investigation when Lindsey reported “the vile text messages.”
In her case, Lindsey will have an advantage that few women with sexual harassment and sexual assault claims had before March of 2022, when Joe Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which allows women to have complaints heard in court even if they signed a mandatory arbitration agreement with their employer. If not for that law, she likely would be relegated to a closed-door hearing that the public is not allowed to attend and where documents are not publicly filed.
Bill Singer, a veteran Wall Street lawyer, said that, over the months since the Goldman Sachs settlement, he sees scant evidence that Wall Street firms are interested in reforms. “I have seen no reaction to the settlement and don’t expect any,” he said. The long, 13-year duration of the suit “will have a chilling effect on most female professionals whose careers will likely be sidetracked by any claims or lawsuits.”
“When It’s Hundreds of Millions, That’s Admitting to Something”
Cristina Chen-Oster, a former vice president in Goldman’s securities division, planted the seeds of the class-action gender-discrimination case in 2005 when she filed a charge with the U.S. Equal Employment Opportunity Commission. She told the agency that, among other grievances, she’d been paid less than similarly situated men and received negative reviews after she reported a sexual assault by a senior salesman. In 2010, she joined with two other Goldman women and sued the firm.
Eighteen years after Chen-Oster’s EEOC charge—and in the wake of years-long battles over mandatory arbitration, access to internal complaints and the women’s status as a class—the two sides reached a deal.
Kelly Dermody, one of the lawyers for the women, said in an email that it was “the largest gender bias class settlement ever recovered” by plaintiffs prior to a jury verdict. Though the settlement stated that the agreed-upon $215 million was only half of the $430 million in damages estimated by the plaintiffs, there was no guarantee that a jury would have awarded that amount.
The good news is that the nine-figure number sends a message to the public. “When it’s hundreds of millions, that’s admitting to something,” said Ellen Pao, the former CEO of Reddit who lost her high-profile discrimination lawsuit against venture capital firm Kleiner Perkins in 2015. “That dollar amount will cause people to realize there is stuff going on that Goldman does not want to be litigated in a public forum.”
Some of Goldman’s intimidating legal tactics could dissuade women from filing complaints in the future, say lawyers. Goldman, for example, sent subpoenas to five companies that had employed the named plaintiffs after they left the firm, asking for their performance evaluations and any negative reports such as reprimands and discipline. The women’s lawyers, who feared the requests would hurt the women’s reputations in the insular financial world, twice asked Goldman to delay sending the requests until the two sides could meet. Goldman sent them anyway.
“The true purpose of the subpoenas is not information, but to intimidate and punish the plaintiffs,” their lawyers wrote to U.S. District Court Judge Robert W. Lehrburger after the subpoenas were sent out in 2019.
Goldman also was able to relegate 1,511 potential class members to arbitration, where their complaints would be heard in private—if they chose to bother with arbitration at all.
Even as it settled, Goldman made sure to avert future legal action by members of the class, which not only has to release Goldman from the claims described in the settlement, but also from any unknown claims “in addition to or different from” what the plaintiffs know today. The inclusion of “unknown claims” was a dealbreaker “separately bargained for and was an essential element of this settlement.”
In the agreement, Goldman denies any wrongdoing and says it did not “in any way” violate gender discrimination laws.
A History of Keeping the Skeletons in the Closet
For decades, Wall Street has been able to keep accounts of discrimination and harassment from spilling out to the public due to its use of arbitration.
Firms benefited from the 1991 U.S. Supreme Court decision in Gilmer v. Interstate/Johnson Lane Corp., in which it ruled that the regional brokerage firm could force former employee Robert Gilmer to pursue his age discrimination case against the firm in private, closed-door arbitration instead of in the public courts. When Gilmer signed his licensing documents to become a broker, he agreed to a clause in the fine print that said any disputes with his employer would have to be heard by arbitrators at the New York Stock Exchange.
At the time, such clauses were quite rare outside of Wall Street. In 1992, only 2% of employment contracts had arbitration clauses. But that number had risen to 7.6% by 1995, according to the Government Accountability Office. And by 2017, as other industries became aware of the option to keep complaints out of court, 53.9% of employers required it, according to research by Alexander Colvin, professor of conflict resolution at the ILR School of Cornell University. The Center for Popular Democracy, an assemblage of community groups and the Economic Policy Institute projected in 2019 that 80% of private sector, nonunion workers would be subject to mandatory arbitration by 2024.
“The only thing that seems to stop employers dead in their tracks is public exposure,” said gender equity researcher Amy Diehl, co-author of Glass Walls: Shattering the Six Gender Bias Barriers Still Holding Women Back at Work.
Linda D. Friedman, a veteran employment lawyer who represented women in multiple lawsuits against Wall Street firms beginning in the 1990s, said in an interview that for years, she held out hope that companies would see the value of treating women equally and institute changes on their own. “But I don’t feel any longer that it’s a reasonable expectation to believe change will come from the corporation,” she said. “We were naïve to believe that corporations that operate for profit would have an epiphany.”
Friedman, whose firm was not involved in the Goldman litigation, said any progress for women in the financial sector is credited to the women who fight back. “When we first started doing these cases, women would call us and they were broken,” she said. “Today, they’re showing up with fight and resolve. I really admire the class reps in the Goldman case.”
Inside the Historic Case
Despite the embarrassing allegations that emerged during the litigation, when the settlement was announced, Goldman’s head of human resources, Jacqueline Arthur, said that the firm “is proud of its long record of promoting and advancing women and remains committed to ensuring a diverse and inclusive workplace for all our people.”
The details of the case illustrated a company top-heavy with men in the senior ranks and dogged by allegations of serious sexual misconduct. In the 11-year period covered in the lawsuit, there were 75 reports of alleged sexual assault and harassment in the three divisions the women worked in. At least seven women reported criminal sexual assault, attempted rape or rape by Goldman men from the three divisions, according to court documents.
In one case, a woman reported that a male colleague groped her during a social event. He said, “I want to fuck you,” and put his hand down her pants to grab her crotch even as she protested. Another woman reported that a male colleague told her that he was “big down there.”
The company’s own numbers, as reported in its 2022 People Report, reveal that men make up three-quarters of its senior ranks but occupy only 23% of its administrative support jobs. Women made up only 29% of Goldman’s new partners announced in November of 2022 and 31% of its new managing directors announced in November.
Julia Cedarholm, a senior associate at Arjuna Capital, an activist wealth manager that pushes companies to address gender pay and other inequities, said companies like Goldman “have the bar set way too low.” She said gender representation should mirror the population, at 50/50. “Thirty percent is not what we’re looking for,” she said.
Goldman has worked hard to avoid releasing data that might expose unequal pay, and social equity organizations have awarded it with failing grades to prove it. In a report released in March, Arjuna Capital and the nonprofit Proxy Impact published an accounting of commitments to closing racial and gender pay disparities at 68 major U.S. companies. Companies were rated from A to F and were evaluated in part by their willingness to disclose median pay. Sixth from the bottom was Goldman, with a score of 11.47% (out of 100) and a grade of F. Cedarholm, who worked on the report, said the only thing keeping Goldman from a score of zero is that it got points for revealing pay gaps in the United Kingdom, where public companies are obligated to reveal such data.
Earlier this year, Goldman’s board of directors unanimously recommended that shareholders vote against a proposal to report gender and race pay gaps, but then relented slightly, saying that in 2024, it would release “adjusted” 2023 data on pay differences among employees doing similar jobs.
But Goldman stood its ground that it would not release the unadjusted median pay data that can provide insights on whether a group is equally represented in high-paying jobs. A company could have 100% equity among men and women doing the same job but at the same time have median pay numbers that reveal that all the top leadership is male. Although unadjusted pay is relied upon by the U.S. Census Bureau and the Department of Labor, Goldman said in its proxy that unadjusted pay “does not provide information that is accurate or useful, as it does not take into account factors such as an employee’s role, tenure, location or impact.”
Similarly, Goldman agreed in the settlement to have an expert analyze three years of pay using adjusted numbers between “substantially similar employees.” The settlement says nothing about unadjusted data. Dermody, the women’s lawyer, said that the analyses will not be made public, as is typical in settlements, because “it is considered a competitive business enhancement that they do not share.”
“If they’re not disclosing that information,” asks Cedarholm, “how are we to hold the company accountable?”
Goldman’s Wall Street competitors might take a lesson that engaging in so many years of combat can cost a firm more than money, said Meredith Benton, founder of Whistle Stop Capital, which assesses social and environmental practices of public companies. “The cautionary tale for other companies was that Goldman fought it for so long and kept it in the news for so long that it undermined their ability to speak of their workplace in a positive way,” she said. “We don’t know what smart and capable men and women didn’t go to work there because of the publicity.”
