It’s remarkable it took this long.
The financial services industry over the years has been great at shooting off its feet and drawing scorn — the financial meltdown, strong-armed foreclosure tactics, Occupy Wall Street, the Wells Fargo fake-accounts scandal, the Equifax breach and on and on — but it had managed to dodge perhaps the most dominant social issue of the day: the long-delayed #MeToo backlash against sexual abuse and intimidation.
Horrid stories had not surfaced about mistreatment of women at banks as they had for Silicon Valley, government and the media and entertainment industries. Yes, the head of the marketplace lender Social Finance, Mike Cagney, resigned in September over allegations by female employees of a hostile work environment, but the company profiles more as a tech upstart than a typical lender, and the case did not touch directly on Wall Street or Main Street banking.
Things changed a little bit in recent days with the emergence of several news stories that a well-connected prime brokerage executive at Bank of America, Omeed Malik, had been forced out this month after an investigation of allegations by female employees that he made unwanted advances and engaged in other possibly inappropriate conduct. (NYT, WSJ and Bloomberg News)
The stories indicate that B of A’s s review was relatively quick and that Malik's ouster was made without fanfare. A news report earlier in the week said Malik had left the company to form an advisory firm for hedge funds; it made no mention of any sexual misconduct allegations. Some of his accusers were reportedly angered that he was seeming to start over without any public knowledge of his alleged conduct.
It’s hard to fully know the truth at this point, and Malik has not spoken out yet in his own defense, but the published reports suggest the case was serious enough for B of A to part ways with him. Moreover, it’s a wake-up call to the industry that even amid the euphoria over tax cuts and the nail-biting over fintech threats and loan-growth challenges, banking executives would be foolish to ignore a revolution in the making — and how their institutions could still get swept up in it. This is a storyline with legs, a movement with more staying power than the scandals du jour bred by the 24-hour news cycle and social media.
To banks’ credit, if they are good at anything, it’s focusing on risk management. Maybe that has helped them so far, as has the rise of women to crucial leadership positions in the industry, as well chronicled in American Banker’s annual Most Powerful Women in Banking rankings. Banks have taken an aggressive, pro-inclusion stance in other recent controversies, such as the defense of transgender employees, objections to the Trump administration’s travel ban and protests of discriminatory state legislation.
But just because banks talk a good game on inclusion and risk management doesn’t mean they always live up to their rhetoric or set the standard for corporate governance. And though some may suggest banks are rich enough these days to buy silence and have made savvy use of arbitration agreements, it would be an unwise assumption that anything can stay concealed in today’s world.
The story involving Bank of America and Malik raises several questions for banks, their investors and their regulators in the coming weeks, including:
- Will this news story out allegations of other incidents elsewhere? Or will incidents that were “handled” get a second, more skeptical look, such as a Goldman Sachs incident mentioned in The Wall Street Journal story on Malik.
- Might some financial institutions that have already sustained reputational blows take new hits, and how much might that hurt their businesses or stock prices?
- Will the spotlight return to vulnerabilities festering below the surface for a long time, such as the dearth of women bank CEOs (leaders like KeyCorp’s Beth Mooney and CIT’s Ellen Alemany belong to a small club) and the short supply of women on many bank boards?
The answer is time will tell, and perhaps at lightning speed. Just ask Hollywood, a host of TV networks and others. It’s no time to wait. Agenda item No. 1 for America’s bank CEOs on Monday may be a hastily called meeting with the general counsel, the risk chief, the human resources director and others to ask these questions: Are there any skeletons in our closets? Is this a good place for women to come to work every day without feeling threatened? And when it’s not, do we have a culture that encourages speaking up … and listening … and action?