March 01, 2018

Warren, Feinstein, Cortez Masto Seek Data on Prevalence of Sexual Harassment in Financial Sector

Secret Settlements and Wall Street Culture Perpetuating Harassment

Text of letter to SEC (PDF)

Text of letter to FINRA (PDF)

Washington, DC - United States Senators Elizabeth Warren (D-Mass.), Dianne Feinstein (D-Calif.), and Catherine Cortez Masto (D-Nev.) today sent letters to the Securities Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), requesting information on the prevalence of sexual harassment within the financial sector.

The financial services industry employs over six million people. According to EEOC data, the "finance and insurance" sector generated the ninth-largest number of sexual harassment claims filed with the agency from 2005-2015. Last year, several high-level financial managers were forced to step down amid harassment allegations.

"The financial sector however has had fewer public revelations of sexual harassment than other industries," wrote the senators. "The silence appears to result from strong ‘cultural and financial forces' in the industry that discourage speaking out, including payout of large settlements with non-disclosure agreements to harassment victims, class-action prohibitions, and forced arbitration."

In July 2011, the SEC established the Office of Minority and Women Inclusion tasked with "assessing the diversity policies and practices of entities regulated" by the SEC. OMWI, along with other financial regulators, established a set of Joint Standards in June 2015 that encourage regulated entities to "ensure() equal employment opportunities" and to "not engage in unlawful employment discrimination based on gender, race, or ethnicity." OMWI's interaction with SEC-regulated financial entities on matters of employment discrimination and diversity provide it with unique insight into sexual harassment in the financial sector.

FINRA oversees 3,700 financial firms and 630,000 individual brokers. Financial firms must register brokers with FINRA - and when the broker leaves, the firm must file a notice including information on the reasons for the broker's termination. In addition, FINRA provides an arbitration and mediation forum to allow investors, brokers, and firms to resolve disputes. FINRA also operates the Central Registration Depository (CRD) which houses employment and disclosure histories of brokers - but it withholds reasons for termination from public review. According to FINRA data, "discrimination and harassment" was one of the top 15 controversies listed in intra-industry FINRA cases in 2017.

The senators requested information on any data the SEC and FINRA have on the pervasiveness of sexual harassment in the financial sector and on what the regulators can do to prevent sexual harassment in workplaces.