The US Equal Employment Opportunity Commission is conducting an investigation into the large-scale layoffs by Morgan Stanley in August 2005 to see whether the New York-based brokerage discriminated against older brokers.

At the time, Morgan Stanley laid off around 1,000 brokers who failed to meet new production hurdles. As brokers gained seniority, they had to generate higher commissions and fees to remain employed.

Morgan Stanley fired brokers with more than eight years' experience who produced $225,000 or less annually in fees and commissions. The threshold was lowered to $150,000 for those with five to eight years' experience and $100,000 for those for one to four years.

A Morgan Stanley spokesman told Dow Jones the brokers were terminated on the basis of performance, not age.

If the EEOC probe finds in favour of those brokers who filed a complaint, it can pursue the case before a federal court on the plaintiffs' behalf or advise the plaintiffs to pursue a court case on their own.

An adverse finding by the EEOC could force a rethinking of pay structures linked to years of service.

Morgan Stanley also faces a federal lawsuit filed by Edward Sullivan, former regional director at the firm's wealth management unit, alleging that he was fired in May 2006 because of his age.