A former Morgan Stanley executive named Kevin Meyersburg is suing the company claiming reverse discrimination, i.e. that he was discriminated against for being white.

A former executive with Morgan Stanley is suing the company for discrimination, alleging he was let go and replaced with a Black woman with “significantly less experience and qualifications” as the part of the financial giant’s efforts to meet its diversity, equity and inclusion goals.

Filed Tuesday in federal court in the Southern District of New York, the lawsuit alleges that Kevin Meyersburg was unfairly terminated this spring from his role as managing director and head of executive services after three years with Morgan Stanley. According to the lawsuit, the executive who relayed the news to Meyersburg that he was being terminated expressed “concern” about the experience level of his replacement and “could not explain to Meyersburg why the decision had been made.”…

“This is an example of DEI run amok,” Meyersburg’s attorney, Louis Pechman, told The Washington Post. “Race cannot be a factor in employment decisions, period. Full stop.”

Meyersburg’s complaint goes into a lot more detail. The basic background is that he was a rising executive at E-Trade when it was bought out by Morgan Stanley. He then began moving up at Morgan Stanley thanks to a new program he had introduced. He was very financially successful:

In August 2021, Meyersburg and McDonald met with Finn to make a presentation on the innovative Partner Referral Program that Meyersburg had developed. Finn approved a pilot for the Partner Referral Program and a new incentive compensation plan for the Executive Service Relationship Managers…

In January 2022, Meyersburg had an annual compensation discussion with McDonald.

McDonald informed Meyersburg that, based on his performance, his base salary would be increased from $240,000 to $400,000 and he would receive a bonus of an additional $400,000.

When you get a bonus that’s larger than you’re entire annual salary, that’s a pretty clear sign your bosses are pleased with your work. Jump forward to 2023 and Meyersburg’s new group had roughly tripled in size and was still outperforming everyone else.

In April 2023, Meyersburg’s Executive Services team accounted for the majority of closes for the month amongst all referral programs, accounting for 51% of all closed assets. His team additionally experienced back-to-back weeks of over 250 leads and $150 million in closed assets, setting a new record for Executive Service Relationship Managers.

But Morgan Stanley as a whole was still struggling and Meyersburg was asked for a list of people under his management who had failed to reach certain performance metrics. He provided the list as required:

Morgan Stanley’s Human Resources department rejected the termination of four employees on Meyersburg’s list, one of whom was a 25-year tenured female and two of whom were diverse candidates.

McDonald informed Meyersburg that, although these individuals’ performance metrics and positions in non-core businesses met the criteria for termination, the Firm had rejected the recommendations for the terminations because of the individuals’ status as diverse candidates.

As the cost cutting continued, Meyersburg was repeatedly told that his group was too important to touch. But on May 11, he was surprised at a lunch with his boss McDonald who told him he was being replaced.

At the lunch, Meyersburg asked about upcoming workforce reductions at Morgan Stanley, and McDonald stated that Meyersburg’s Executive Services team was too important to Morgan Stanley overall and would not be combined with other teams.

As the lunch progressed, McDonald told Meyersburg that he had to let go of most if not all of the Wellness Team due to its underperformance under its Managing Director.

Immediately following this statement, however, McDonald told Meyersburg that Morgan Stanley had decided that the Financial Wellness Team’s Managing Director—a Black female—would replace Meyersburg as Managing Director of the Executive Services team.

The guy who built the most successful team to win new clients was being replaced by a woman whose team was being let go for poor performance. That does seem odd.

McDonald proceeded to inform Meyersburg that Morgan Stanley was terminating his employment and replacing him with the Financial Wellness Team’s Managing Director.

Meyersburg asked McDonald what he could have done differently to keep his position. McDonald informed Meyersburg that the termination decision was not based on his performance but could not explain to Meyersburg why the decision had been made, and instead simply shrugged his shoulders.

McDonald told Meyersburg that he was concerned about the individual that Morgan Stanley had selected to replace him because she did not have experience with or an understanding of the Executive Service team’s business model and would need a lot of help. McDonald even asked Meyersburg if he would be willing to help his replacement during the transition, an invitation that Meyersburg declined.

Adding insult to injury, McDonald also told Meyersburg at the lunch that the Partner Referral Program had become so successful that despite layoffs across Morgan Stanley, the Firm was adding another thirty-five Executive Relationship Managers to the Executive Services team.

When he spoke to others inside the company about his firing, he was told it had to do with DEI goals. His replacement had managed a group of 25 people dealing with clients whose assets were under $250,000. Meyersburg had managed a group of 330 dealing with clients whose minimum assets were $750,000. She had 10 years of experience and Meyersburg had twenty-six. By her own admission (according to the complaint) she didn’t really know how Meyersburg’s team operated.

As recently as March 2023, the Wellness Director asked Meyersburg to have a member of the Executive Services team make a presentation to the Wellness Team as the Wellness Director was unfamiliar with the Executive Service team’s model but was aware of its successes.

No doubt Morgan Stanley will have a different explanation for what went on here but based on the facts presented in Meyersburg’s complaint the decision to replace him seems very strange.

Finally, just a reminder that just two months ago a former Starbucks manager named Shannon Phillips filed a similar lawsuit claiming she was fired while a black employee who’d been more directly involved in a major embarrassment for the company was retained. A jury sided with her and awarded her $25 million.