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Technology

SoFi CEO to step down following a lawsuit over sexual harassment at the firm

Social Finance, an online lender that has been one of the more prominent financial technology start-ups, said on Monday that its co-founder and chief executive Mike Cagney planned to step down by the end of the year.

The development follows claims and a lawsuit over sexual harassment at the San Francisco-based start-up, which is known as SoFi. Several former employees said that Mr. Cagney, 46, had inappropriate relationships with SoFi employees that helped foment a toxic workplace culture.

In addition, Mr. Cagney may have been overaggressive in expanding SoFi’s business, skirting risk and compliance controls, said people with knowledge of the situation, who asked not to be named because they were not authorized to speak publicly.

In a letter to employees, sent out on Monday evening, Mr. Cagney wrote that “the combination of HR-related litigation and negative press have become a distraction from the company’s core mission.” Mr. Cagney is stepping down as both chief executive and chairman.

SoFi joins a list of other technology start-ups that have also been dealing with workplace culture issues. This year, Uber, the ride-hailing company based in San Francisco, has grappled with claims of sexual harassment and questions over its business tactics, resulting in many of it senior leaders — including its chief executive, Travis Kalanick — leaving their positions. (Mr. Kalanick was not personally accused of sexual harassment.) Venture capitalists who finance start-ups have also faced questions over sexual harassment of women entrepreneurs.

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SoFi was founded in 2011 and began by refinancing the loans of elite students online. Since then, it has branched out to offer mortgages and personal loans, and it recently began the process of applying for a banking license. The privately held company, which is valued at more than $4 billion, has raised in nearly $2 billion from investors, including SoftBank, Discovery Capital and Baseline Ventures.

The firm was sued in August by a former employee at the company’s main satellite office, in Healdsburg, Calif., who said that he had been fired after complaining about managers sexually harassing their subordinates.

The company announced this month that it was starting an investigation into the claims.

SoFi said on Monday that Mr. Cagney would be replaced immediately as the company’s chairman by another board member, Tom Hutton, an early investor in the company.

A spokesman for SoFi disputed the notion that the company had taken on too much risk in its business. The spokesman also said that the board investigated a dispute between Mr. Cagney and a former employee in 2012, and it found no evidence of a romantic or sexual relationship and reached a settlement on the issue after an investigation.

Mr. Cagney did not immediately respond to an email requesting comment.

Source: Tech CNBC
SoFi CEO to step down following a lawsuit over sexual harassment at the firm

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