Square: COO's Resignation Tied to Sexual Harassment Claim

The Thursday resignation of Square chief operating officer Keith Rabois stems from a sexual harassment allegation, according to the company.

"The first we heard of any of these allegations was when we received the threat of a lawsuit two weeks ago," Ricardo Reyes, a Square spokesperson, said in an emailed statement provided by the company. "We took these allegations very seriously and we immediately launched a full investigation to ascertain the facts. While we have not found evidence to support any claims, Keith exercised poor judgment that ultimately undermined his ability to remain an effective leader at Square. We accepted his resignation."

Square also provided a link to a statement on the Tumblr blogging site it attributes to Rabois.

"In May 2010, I met someone via mutual friends. With increasing frequency, we hung out, drank wine, and I helped prepare him for interviews with tech startups. As our friendship deepened, we spent more time together, and our relationship became physical. … Several months after our relationship began, I recommended that he interview at Square," the blog post says.

"He went through the interview process and was ultimately hired," the post says. "I had no impact on his potential success at the company. At no point did he ever report directly to me, and I have seen his work product less than a handful of times."

Rabois offered his resignation shortly after he was contacted with the allegations by an attorney.

"Last week, a New York-based attorney threatened Square and myself with a lawsuit," the post says. "I am told this lawsuit would allege that the relationship was not consensual, and would go on to accuse me of some pretty horrible things. I was told that only a payment of millions of dollars will make this go away, and that my career, my reputation, and my livelihood will be threatened if Square and I don’t pay up … While I have certainly made mistakes, this threat feels like a shakedown, and I will defend myself to the full extent of the law."