Not that she needs it, but the defiant girl statue has yet another reason to stare down that Wall Street bull.
A new study released Monday shows that while female financial advisers are less likely than their male counterparts to engage in misconduct, they are punished far more harshly after complaints of wrongdoing.
The report, titled, perhaps a bit too lightly, “When Harry Fired Sally,” specifically calls out Wells Fargo (wfc) as one of the top offenders. The report says that Wells Fargo regularly punished female employees at a “substantially higher rate relative to male advisers.”
Specifically, the study’s authors found that female financial planners at Wells Fargo Advisors were more than 25% more likely to experience a “job separation” after misconduct than their male counterparts.
Allegations of gender discrimination could be the latest set back for Wells Fargo, which has been dogged by revelations of a number of instances of misconduct in the past year. Last fall, Wells Fargo was hit with the largest fine in the history of the Consumer Financial Protection Bureau for pressuring employees to “cross-sell,” which resulted in bank employees opening millions of phony client accounts.
A spokesperson for Wells Fargo noted that the bank is still reviewing the discrimination study. “We will continue to focus on providing a diverse and inclusive work environment where all of our team members can thrive,” she said in an email to Fortune.
Overall, the study’s general results shouldn’t be surprising. They back up what women in the industry have been reporting for quite some time. About 88% of female financial service professionals believe that gender discrimination exists within the industry. Sheila Bair, former chair of the FDIC, has noted the glass ceiling in finance is “barely cracked” for women.
The study was conducted by finance professors Mark Egan of the University of Minnesota Carlson School of Management, Gregor Matvos of the University of Chicago Booth School of Business, and Amit Seru of Stanford Graduate School of Business.
Their research finds that in general, across Wall Street firms and number of large banks, following an incidence of misconduct like fraud, or the omission or misrepresentation of key facts, female advisers are 20% more likely to lose their jobs, and 30% less likely to find new jobs within a year, relative to their male colleagues.
When controlling for more variables—essentially comparing men and women employed at the same firm, in the same county, in the same year—the punishment is 50% larger for women who engage in misconduct than for men.
Of course, that alone doesn’t prove discrimination. Perhaps the misconduct by women was more severe and deserved harsher punishment?
But when the researchers tried to account for this, they found that the reverse is true.
Women were less likely to engage in misconduct in the first place, and when they did, the damage caused to their firm tended to be lower. Meanwhile, women were also less likely than their male colleagues to be become repeat offenders.
For instance, male advisers make up 75% of financial advisers, and are three times more likely to engage in misconduct than their female colleagues. On average, roughly 1-in-11 male advisers has a record of past misconduct, compared to only 1-in-33 female advisers. When male advisers engage in misconduct, the damages are 20% more costly to settle for firms. Male advisers are also more than twice as likely as female advisers to become repeat offenders.
Now to be clear, the paper has yet to be peer reviewed, and it’s possible the researchers missed another factor that could explain why women are punished more severely.
Prominent Wall Street lobbying group, the Securities Industry and Financial Markets Association (SIFMA), has also taken issue with the authors’ methodology in the past, arguing that they improperly measure misconduct and misleadingly include all licensed securities personnel. Only half of those, though, are client-facing financial advisers. The rest are traders, investment bankers, or in compliance, legal, operations or other departments that do directly serve clients.
Matvos, one of the authors, pushes back against those criticisms, saying that if anything his and his colleagues methodology under-measures misconduct. He notes that once they focus on just client-facing advisors, the misconduct levels actually increase. The authors also looked at several categories of misconduct, and found their results on male versus female employees still held true.
The sample size was large, initially including all 1.2 million U.S. financial services employees registered with the Financial Industry Regulatory Authority from 2005 to 2015. Brokers and advisers registered with FINRA are required to disclose customer complaints and arbitrations, regulatory actions, employment terminations, bankruptcy filings, and criminal or judicial proceedings on their official record.
That FINRA data, however, does not include gender as a variable, so the researchers used GenderChecker software to match and assign 82% of the advisers to a gender.
They also controlled their data to account for firms, time, and location, as well as male and female advisers with the same qualifications and experience. Even after controlling for these variables, male advisers were found to be more likely to engage in misconduct.
“It might not be a surprise to women in the industry,” said Matvos, one of the authors. “But this gives more credence to their anecdotes.”
He noted that he hopes the study will broaden the discussion about gender discrimination beyond just the issues of the wage gap or hiring practices.
“It speaks to a broader issue well beyond the financial services industry,” he said. “There’s less tolerance for women’s missteps. People are more lenient in punishment of men than women.”