Vanguard Group Inc, one of the largest mutual fund companies, agreed to pay $300,000 to settle a U.S. Equal Employment Opportunity Commission lawsuit accusing it of racial bias in hiring.

In a September 29 complaint, the EEOC alleged that Vanguard decided not to hire Barbara Alexander as a financial planning manager because she was black even after she was told throughout the hiring process, including at roughly 13 in-person interviews, that she was qualified for the job.

Despite Alexander's 14 years of financial management experience and master's degree in finance, Vanguard instead offered the Charlotte, North Carolina job to two less qualified white men, and one accepted, the EEOC said.

According to papers filed Monday with the federal court in Philadelphia, Vanguard will pay the $300,000 to Alexander, and entered a two-year consent decree calling for greater anti-discrimination training for managers and supervisors, and other remedies. It did not admit liability.

Vanguard spokeswoman Linda Wolohan called the claim without merit and unsubstantiated but said the company settled to avoid the cost and distraction of litigation. She said Vanguard is committed to diversity and to providing an inclusive and fair environment for its employees.

The Malvern, Pennsylvania-based company said it oversaw about $1 trillion of investor assets as of August 31, 2009, regulatory filings show.

In a statement, EEOC acting regional attorney Debra Lawrence commended Vanguard for its willingness to resolve this matter amicably and early in the litigation process.

The case is Equal Employment Opportunity Commission v. Vanguard Group Inc, U.S. District Court, Eastern District of Pennsylvania, No. 09-04424.

(Reporting by Jonathan Stempel. Editing by Robert MacMillan, Bernard Orr)