Strip clubs are out for business meetings Wall Street starts to crack down

Jayne O'Donnell USA Today Mar. 26, 2006 12:00 AM

NEW YORK - Wearing a scant blue gown with rhinestone clasps, Nicolette Hart says she can make up to $2,500 a night with investment bankers and their clients in a Manhattan strip club's private rooms.

They often say they're having a meeting.

"I say, 'You're having a business meeting in a strip club?' " she said.

It's not just strippers who have questions. Some women on Wall Street want to know how it can be fair, or legal, for their managers and male colleagues to exclude them when they fraternize at strip clubs, often with the women's clients. Strip-club clientele is hardly limited to Wall Street. Adult entertainment is enjoyed by men, and some women, in almost every industry in the country, and it's a tax-deductible business expense allowed by the Internal Revenue Service.

But investment banks and brokerages are taking the lead in cracking down on the practice. The National Association of Securities Dealers and the New York Stock Exchange recently proposed rules that would force companies to adopt business-entertainment policies that cap amounts and specify appropriate venues. The move is expected to rule out company-paid or work-related strip-club jaunts at the more than 5,000 brokerages in the United States.

The stock exchange and the NASD acted in large part because of lawsuits brought by women employees.

The women who have sued say strip clubs are emblematic of a larger problem on Wall Street: a macho culture that leaves them behind in all areas.

"There are two levels of discrimination: the frat-house environment in the office and the deeply embedded practices that are just starting to be uncovered, like the distribution of accounts, business leads and promotions," said Hydie Sumner, a financial consultant who was awarded $2.2 million in 2004 after suing Merrill Lynch for gender discrimination. "When 'business activities' involve the strip club, golf course or hunting ranches, discrimination is often perpetuated as those in power support and advance those with like minds and tastes."

Ultimately, some believe, other industries will be affected.

"This is going to have a trickle-down effect," said Aliza Herzberg, a New York employment lawyer who represents many manufacturing and small-business clients. "Companies will try to make taking clients to strip clubs, which is very common, a thing of the past, just like the three-martini lunch."

It was a Fidelity Investments trader's 2003 bachelor party, paid for by brokerages, that prompted the NASD to consider tightening its rules.