Sexism Case Heads to Court

Executives at Morgan Stanley are facing an uncomfortable summer as the US government's equal opportunities watchdog takes the investment bank to court alleging it discriminated against female employees.

The equal employment opportunity commission is backing former bond trader Allison Schieffelin who is suing the firm saying that she was passed over for promotion and then sacked when she complained. It is the first time that the watchdog has gone to court against a big Wall Street investment bank.

Papers filed with the court in New York state that she might seek more than $50m (£28m) in lost earnings. The EEOC is expected to call other female employees from the bank to testify. Morgan Stanley is expected to counter that it has many senior female staff and promotions are based purely on merit.

The case will reopen the debate about the behaviour of bankers and traders on Wall Street with details expected to emerge during the hearing, before a jury, of practices such as late night visits to strip clubs. With Wall Street's top firms trying to rebuild their shattered public image after recent financial scandals, a round of discrimination cases is the last thing they need.

The court filings are understood to contain details of the experiences of other former Morgan Stanley employees, which included one female trader being presented with a birthday cake in the shape of a breast. The EEOC believes that more than 300 women might have a case against the firm.

The EEOC sued Morgan Stanley more than two-and-a-half years ago and in the past such discrimination cases have been settled before reaching court. Despite a number of meetings between the two sides and the presiding judge, no resolution has been reached in this case. A number of senior Morgan Stanley executives are expected to appear to defend the company's practices. The jury who will hear the case was selected last week.

Legal experts question the chances of the watchdog winning its battle against the bank. Some on Wall Street believe Morgan Stanley wants its day in court and expect the firm to mount a strong defence.