An ?Animal House? atmosphere in the male-dominated financial services industry can end up costing businesses and their insurers millions of dollars in sexual harassment and gender discrimination lawsuits, a conference was told this week.

Investment banks and stockbrokers including top Wall Street firms Smith BArney and Morgan Stanley have been hit with a flurry of employment practice liability (EPL) claims, New York lawyer Adeola Adele told attendees at the Sedgwick Fourth Annual Hot Topics Seminar for the Bermuda Insurance Market at the Bermuda Underwater Exploration Institute.

?Long work hours have contributed to EPL claims and (male) employees feel the need to let loose a little bit and they start to behave badly and send e-mails at hours of the night to female employees and get in a lot of trouble for it,? she said.

She said the macho culture or frat house environment still exists to some degree in some investment and brokerage firms ? so it?s no surprise that the industry has gained a reputation for behaving badly.

Ms Adele represents domestic and international insurers in commercial litigation, preparation of coverage opinions and counselling in insurance coverage involving first and third party employment practices, directors and officers and professional liability claims.

?Some of the complaints in the sexual harassment/discrimination lawsuits include allegations that male employees and supervisors hire strippers to perform at the office, circulate pornographic magazines and pictures in the office and entertain clients at strip clubs.

?Embarrassing and humiliating sexual explicit or offensive e-mails and pornographic materials in the workplace have also been the subject of some of the lawsuits.?

Ms Adele said the National Association of Securities Dealers and the New York Exchange recently proposed rules to force firms to adopt a cap on business entertainment policies.

She said both organisations also proposed a rule specifying appropriate venues for business entertainment but the bad behaviour at most investment firms and brokerage firms continues to be documented in many of the pending sexual discrimination/harassment lawsuits.

?Given the bad publicity that often accompanies EPL class action lawsuits, and to avoid scrutiny of their corporate culture and hiring practices, it is not uncommon for investment banks to quickly settle claims, whether or not meritorious.?

?The Smith Barney Boom Boom Room Case ? (costing) approximately $100 million to date ? is probably the most infamous of the sexual harassment cases brought against an investment bank to date.?

She said in this case three employees brought a class action lawsuit in which they alleged that a basement room (the Boom Boom Room) in Smith Barney?s Garden City, New York offices served as a venue to entertain strippers and engage in lap dancing and other boorish behaviour.

?Male employees allegedly engaged in lurid behaviour, drank Bloody Marys from a barrel and routinely subjected women to lewd pranks.?

Ms Adele said the women alleged they were denied equal pay and opportunities for promotion and the case earned Smith Barney the unflattering title ?The Merchant of Shame? from the National Organisation for Women.

In a separate class action suit, Morgan Stanley settled a sex discrimination claim in July, 2005 for $54 million and agreed to implement training and diversity programmes that would equalise the pay and promotions of its female employees.

In that case, the US Equal Employment Opportunity Commission (EEOC) filed a lawsuit on behalf of Allison Schiefflin, a former bond trader, and a class of 340 women who claimed they had been paid less than their male counterparts because of their gender.

The EEOC claimed that when Ms Schieffelin complained about her treatment she was fired from her job.

?The EEOC alleged that Morgan Stanley engaged in a pattern and practice of discrimination against women in terms of pay, promotions and other opportunities for advancement and were subjected to offensive comments, banter, jokes and frequent use of derogatory terms such as Bitch,? Ms Adele said.?

Morgan Stanley denied the allegations of a pattern and practice of discrimination and contended that Ms Schiefflin had was fired for gross insubordination.

But Ms Adele said the firm settled the claim and agreed to implement training and diversity programmes that would equalise the pay and promotions of its female employee.

?While most companies have adopted policies to prohibit and investigate sexual harassment and gender discrimination, a lot of companies do not enforce their own policies,? she said.

?Several class action lawsuits recently filed against investment banks allege that the employer failed to investigate or improperly investigated allegations of discrimination/harassment and retaliated against the employees for bring such complaints.?