A lawsuit filed by a former Citigroup employee this week makes a familiar, if disappointing, allegation: the bank is a “boys’ club” that deprives women of professional opportunities and puts males atop the pecking order. A “culture of gender discrimination” permeates the bank, the lawsuit alleges, disadvantaging women like plaintiff Erin Daly, a former Citi financial adviser.
It’s not the first time an employee has leveled these charges against a major Wall Street bank, let alone Citigroup. In 2010, a group of six women sued the bank, similarly alleging a “boys’ club” mentality that subordinated women to their male colleagues. Retrograde as these alleged conditions are, they still don’t come as a surprise. We’ve all seen the DiCaprio movie.
But the lawsuit also alleges that the bank retaliated against Daly, not just over her complaints of unfair treatment, but for blowing the whistle on alleged violations of insider trading rules – including on the 2014 Alibaba IPO that Citigroup helped arrange, which remains biggest public offering ever.
If substantiated, these allegations would go beyond the typical claims of chauvinism in big banks to reveal securities misdeeds at the center of Citigroup’s profitable investment banking operations.
“We believe the claims alleged are without merit and intend to vigorously defend against them,” Citigroup spokesperson Danielle Romero-Apsilos said. The plaintiff’s lawyer, Michelle Daly, declined to comment.
Erin Daly began at Citigroup’s brokerage department in 2007 and wound up working in the Private Bank, where she developed expertise in securities laws and helped advise on sensitive deals in which the bank sold off IPO shares to clients, the complaint claims.
It was there the trouble first began. For reasons that remain mysterious, Daly in 2012 lost her access to view the trading book and allocate stock within the private bank. “Because of the discretion afforded the Desk in distributing stock of certain ‘hot’ IPOs,” the lawsuit claims, “individuals who had this power were seen as extremely valuable by clients and by other employees.”
Daly asked repeatedly why she was the only member of her desk without access to the book, eventually lodging a complaint asking, “Is this because I am female?” Her superiors responded testily, according to the lawsuit, going so far as to demand an apology for the grievance.
“Clients, analysts, assistants, everyone heard the message,” the lawsuit reads. “The boys were in charge. The men were doing business. Erin was just a glorified secretary.”
Then things got worse.
In the course of her eight-year career at Citi, the Upper West Side resident built up expertise in the complicated regulations around allocating IPO stock to bank clients, according to the lawsuit. That meant Daly had access to some information of a sensitive – and potentially profitable – nature.
Among the colleagues angling for that information was Daly’s manager, James Messina, the lawsuit claims. Messina “constantly demanded that Erin disclose material nonpublic information” and “harassed Plaintiff to tell him protected inside information so that he could pass the information along to his favored clients,” according to the complaint.
Such demands would have represented breaches of the firewall required between bankers working on an IPO and those who hope to trade the stock. Daly blew the whistle on the alleged mischief in November, 2015. Five days later, she was told to pack up her belongings. Soon afterward she was terminated.
On her U5 form – a crucial document that follows financial professionals from job to job – Citi allegedly wrote that Daly had been chronically tardy and insubordinate, and had forwarded sensitive information without approval. The latter charge, the lawsuit claims, referred to a call Citi lawyers asked her to make.
Citi, of course, denies the allegations in full, and at present there’s nothing to substantiate claims of employees reaching “over the wall” for privileged information in advance of hot IPOs at Citi.
Even if there is substance, the lawsuit – together with simultaneous complaints to the U.S. Equal Employment Opportunity Commission and New York's Labor Department – has one big weakness: timing. Let's see a Trump administration go after this one.