SoFi responds to sexual harassment and wage lawsuits

Katie Roof
One month after reports of a sexual harassment and wrongful termination lawsuit against the online lending startup Social Finance came to light, the company has announced that its hard-charging chief executive Michael Cagney will be stepping down at the end of the year.

Last month, Social Finance, or SoFi, a startup centered around the refinancing of student loans, was sued by a former employee. The senior operations manager who filed the lawsuit, Brandon Charles, says he was wrongfully terminated for reporting sexual harassment of female colleagues by their managers, as well as for outing several managers who he claims improperly recorded loans in order to goose their bonus pay.

Days later, a group of five former SoFi employees filed a separate lawsuit, alleging they weren't given breaks or paid in accordance with California law.

Now, SoFi CEO Mike Cagney is sharing more information about those suits, which were filed by the same lawyer, Robert Ottinger. In a new post, he also stresses that he's taking the complaints seriously, writing:

"While we’re confident in our positions in these cases, we take these types of claims seriously. Our legal team is hard at work preparing our responses, and as part of that work, we’ve had many discussions with current and former employees about these issues.

Based on these discussions, we’ve discovered that the same lawyer has been trying to collect information relating to alleged sexual harassment at the company, and that he has several people who are prepared to formally allege they were the victims of or witnesses to improper activity at our Healdsburg operations office.

To be blunt, that kind of behavior has no place at SoFi, and we’re not going to tolerate it."

The first legal complaint, filed on behalf of Charles and amended yesterday, is highly graphic, as is plain in this excerpt:

"Mr. Charles became aware that a SoFi manager, Michael Phillips, was openly discussing anal sex with a younger, female subordinate at work. Mr. Charles also learned that this same manager asked another female subordinate to bring him K-Y sex lubricant. Mr. Charles reported this conduct to the head of human resources in San Francisco and other SoFi officials. Rather than being rewarded, Mr. Charles was terminated several weeks later. No woman should be forced to endure sexual harassment."

A SoFi spokesperson responded to the amended complaint with harsh words meant to minimize Ottinger's credibility. "These cases are brought by a lawyer who tells prospective clients on his YouTube channel that the facts and the law aren’t the most important factors in employment lawsuits. Apparently," the statement continues, Ottinger "prefers to defame companies and individuals with lurid rumor and innuendo in the hope he will be paid to go away. That's unethical and wrong. As we said when the case was filed, Mr. Charles' claims were investigated in depth by the company and found to have no merit. We will vigorously defend ourselves against any claims otherwise."

Cagney took a softer tone in his post of earlier today, saying that, "While it is too early in the investigation to know exactly what might have happened in these incidents, we need to continue to raise the bar for our policies, procedures, and programs to make sure that we’re not just bringing in great people, but creating a culture where all of you thrive."

From reports of a sexist culture at Uber to sexual harassment allegations that brought down high-profile venture capitalists like Dave McClure, Silicon Valley companies have been under added scrutiny in recent months, as the industry evaluates its treatment of women.

SoFi has raised almost $2 billion in debt and equity financing. The company has become a leader in lending and other "fintech" categories.

See below for the full note from Cagney:

TO: SoFi team
FROM: Mike
SUBJECT: Litigation and our culture

Team — SoFi is based on the values of speed, transparency and alignment. To that end, I have some thoughts to share with you related to the two lawsuits filed earlier this month.

While we’re confident in our positions in these cases, we take these types of claims seriously. Our legal team is hard at work preparing our responses, and as part of that work, we’ve had many discussions with current and former employees about these issues.

Based on these discussions, we’ve discovered that the same lawyer has been trying to collect information relating to alleged sexual harassment at the company, and that he has several people who are prepared to formally allege they were the victims of or witnesses to improper activity at our Healdsburg operations office.

To be blunt, that kind of behavior has no place at SoFi, and we’re not going to tolerate it.

These allegations are being thoroughly investigated by outside attorneys we have engaged. To the extent we determine that there is any truth to the allegations, swift and severe action will be taken. Jing will be following up with an anonymous means for employees to provide our counsel information that could be helpful to their investigation.

While it is too early in the investigation to know exactly what might have happened in these incidents, we need to continue to raise the bar for our policies, procedures, and programs to make sure that we’re not just bringing in great people, but creating a culture where all of you thrive.

We are taking multiple steps to strengthen our approach to HR and training, including new ways for people to anonymously provide feedback on any issues they discover, and new training and education programs for both managers and individual contributors.

I am so proud of the company that we have built together, and I hope you are too. SoFi has more than 350,000 members, and together we have saved them billions of dollars, helped them get out of debt faster, and buy homes when they thought buying a home was out of reach.

We continue to grow fast – we’re already over 1,000 people, and just completed a record month for the business in August. But our rapid expansion is no excuse for bad behavior in the workplace. We, together with our members, are the embodiment of this company in the world, and I want both groups to be equally proud to wear a SoFi t-shirt like we do every Friday (or, in my case, almost every day).

Thanks,

Mike