Bank of America Corp. is seeking approval of a $160 million settlement from a judge who thrice rejected requests by black financial advisors at its Merrill Lynch unit to sue as a group over alleged racial discrimination.

U.S. District Judge Robert Gettleman, whose decisions denying claimants’ class status were overruled on appeal, is set to hear arguments today from the bank’s attorneys and lawyers representing at least 1,000 advisors.

The settlement, which would end an eight-year legal battle if approved, is the third biggest in U.S. race-bias litigation, according to data compiled by Bloomberg. In agreements that included non-cash consideration, Coca-Cola Co. agreed in 2001 to pay $192.5 million. Texaco Inc. paid $176 million in 1997.

Beyond the proposed cash payout in the Merrill case, the parties are aiming for “organic change” in how the firm operates, said Linda Friedman, a lawyer for the advisors.

“We’re going to have the lawyers back off and create a process by which the company can own the change from the get-go,” Friedman said in a phone interview.

“We are working toward a very positive resolution of a lawsuit filed in 2005 and enhancing opportunities for African-American financial advisors,” Bill Halldin, a Bank of America spokesman, said last week in an e-mailed statement. The bank doesn’t admit any wrongdoing in the settlement.

Dissolving Unit

The second-biggest U.S. lender by assets, Bank of America acquired Merrill for $33 billion in 2009. The Charlotte, North Carolina-based bank plans to dissolve the unit as early as the fourth quarter while keeping the Merrill Lynch brand for its retail brokerage and investment bank, according to an Aug. 2 filing.

Merrill Lynch had about 14,000 financial advisors as of June 30, excluding those working at bank branches. Bank of America’s entire staff was 257,158.

The central claim in the case was that blacks weren’t given the same business opportunities as whites in participating on investment teams and in account distribution.

Formation of advisor teams is one of Merrill’s most important business strategies, Stowell & Friedman partner Suzanne Bish said in a phone interview last week. Black advisors were segregated and excluded from the teams and the benefits and business resources they afforded, she said.

The original complaint was filed in 2005 by George McReynolds, a broker in Merrill Lynch’s Nashville office.

Professional Attitude

McReynolds still works for Merrill Lynch, Bish said. He and the firm maintained a professional attitude throughout the litigation based on a common “passion for their clients,” she said.

While Gettleman repeatedly rejected requests for group claimant recognition, the black advisors prevailed after the U.S. Supreme Court in 2011 refused to recognize a nationwide class of 1.5 million women suing Wal-Mart Stores Inc. for gender bias.

In the Wal-Mart case, the high court concluded the women failed to show the retailer had a nationwide policy leading to discrimination.

The advisors’ suit was based on claims that the discrimination was due to “very centralized control by Merrill Lynch,” Bish said.

Class Certified

After a February 2012 appeals court ruling in the employees’ favor, Gettleman certified a class of black financial advisors and financial advisor trainees in the U.S. retail brokerage unit of the firm’s global private client division.

The changes Merrill agreed to make under the accord include appointing two experts to review the firm’s teaming and pooling policies, Friedman said.

Those experts, one of whom will be selected by each side in the case, will spend a year visiting firm offices and interviewing people and will report on the company’s policies and practices.

Immediate changes will be made to financial advisor training, known as Practice Management Development, to stem African-American attrition rates, Friedman said. The firm agreed to appoint two coaches she described as “godfather rabbis” for African-American trainees.

The cases are McReynolds v. Merrill Lynch, 11-01957, U.S. Court of Appeals for the Seventh Circuit (Chicago), and McReynolds v. Merrill Lynch Pierce Fenner & Smith Inc., 05- cv-06583, U.S. District Court, Northern District of Illinois (Chicago).