Morgan Stanley agreed on Monday to pay $54 million to settle a sex discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission on behalf Allison Schieffelin, a former convertible bond sales representative, and as many as 340 woman.

As part of the settlement, Morgan Stanley, which did not admit to any wrongdoing, agreed to spend at least $2 million on diversity programs designed to enhance the compensation and promotional opportunities for female employees within the firm.

“We are pleased that Morgan Stanley worked cooperatively with us to resolve this litigation,” said EEOC Chair Cari M. Dominguez. With this settlement, Morgan Stanley has taken an important leadership step in adopting progressive programs to promote diversity that should serve as a model for the financial services industry.”

EEOC’s lawsuit, filed on September 10, 2001, alleged that Morgan Stanley discriminated against women in its Institutional Equity Division with respect to promotion, compensation and the terms, conditions and privileges of employment.

The suit also contended that Morgan Stanley retaliated against Ms. Schieffelin, and ultimately fired her, after she voiced her opposition to discriminatory practices at the firm.

Morgan Stanley officials in a statement said: the firm “denies the allegations and any liability and contends that it has, at all times, treated its women employees fairly and equitably.”

Under the terms of the settlement, present and former female employees of the Morgan Stanley’s Institutional Equity Division who believe they were the subject of discrimination will have the opportunity to make claims to a specially established fund of $40 million.

Ms. Schieffelin will get at least $12 million of the money paid by Morgan Stanley.

“I am happy that this case has been settled to the satisfaction of all the parties,” said Ms. Schieffelin.

(via U.S. Equal Employment Opportunity Commission)