After criticism for their hasty return to profitability while the world still struggles to recover from the economic downturn, after paying 550 million US dollars to settle civil securities fraud charges related to their selling subprime mortgage securities, a new wave of negative PR hits Goldman Sachs as the investment bank has just been sued by three former employees who claim the firm systematically discriminates against women.
The three plaintiffs claim Goldman Sachs intentionally pays female employees more than it pays male employees, and prefers men when it comes to promotions. This persistent pattern has caused women to be underrepresented in the investment bank’s management team.
“The number of women in management positions at Goldman dwindles as the level of management rises,” the complaint quoted by CNBC (via New York Times), using Goldman data as proof to point out women made up 29 percent of the firm’s vice presidents, 17 percent of its managing directors and 14 percent of its partners.
Goldman Sachs representatives claim there is no reason for such a lawsuit:
“We believe this suit is without merit. People are critical to our business, and we make extraordinary efforts to recruit, develop and retain outstanding women professionals,” said Lucas van Praag, a Goldman spokesman.
Goldman Sachs is not the only Wall Street firm to be confronted with such accusations. During the past decade, there have been quite a few law suits on the same issue of discrimination against women, with complaints targeting companies such as Morgan Stanley and Bank of America Merrill Lynch.
Beyond the actual lawsuits the reality is that there aren’t that many women executives at the top of Wall Street firms. Today’s most prominent female top executives include Sallie Krawchek, the head of global wealth and investment management at Bank of America; and Heidi Miller, head of international operations at JPMorgan Chase.
The current accusations against Goldman Sachs range from lower payments for female employees to sexual harassment and increased hostility for female victims of such severely unprofessional behaviors. Regardless of how this turns out, the bad press is bound to take its toll on the already shaky image of Goldman Sachs. The gravity of the hit will be determined by the result of the lawsuit.