Men behaving badly edition (UBS, Goldman Sachs, FHFA and more)
Distressing boss moves: Mel Watt, the powerful regulator of mortgage giants Fannie Mae and Freddie Mac, is under investigation for alleged sexual harassment of an employee. Politico broke the news that the director of the Federal Housing Finance Agency allegedly made repeated inappropriate sexual advances toward a staffer when she tried to discuss career and salary concerns. In one of several encounters Politico detailed, Watt asked about a tattoo on her ankle, saying, “If I kissed that one, would it lead to more?" The FHFA staffer filed a complaint with the Equal Employment Opportunity Commission, which is looking into the matter. Watt called the leak to the press politically motivated and insisted he had done nothing against the law. The question of legality aside, the scandal could force Watt to exit before his term ends in January, American Banker said in its analysis.
Rape accusation prompts review: UBS Group said it’s planning to review how the bank handles cases of harassment after an incident in which a young London-based female trainee accused a more senior male employee of rape, Bloomberg reported. The alleged perpetrator resigned from the investment bank in March, five months after he was suspended. An investigation hadn’t been completed by the time he left, so no formal disciplinary procedure had started, the company said. The woman also left UBS this year, but sent an email last week to Andrea Orcel, the head of its investment bank, saying that the company’s human resources department mishandled her complaint. “After one month of allowing the man who assaulted me to work in close proximity to me, HR suspended him pending an investigation,” then refused her requests for updates, she wrote in the email, which claimed that the UBS investigation was completed, but nothing happened.
Immediate escalation is Credit Suisse’s new approach: The UBS review follows a similar one at Credit Suisse, which resulted in it creating a Zurich-based role to lead the handling of sexual harassment claims and to assess its policies and training practices globally, according to Reuters. Antoinette Poschung, head of human resources for corporate functions, took on the title of conduct and ethics ombudswoman in July. “Her role is to serve as a point of immediate escalation when sexual harassment claims arise and to ensure there is appropriate senior management awareness of and attention to such claims,” Chief Executive Tidjane Thiam said in a note to employees. Questions about the handling of a former employee’s sexual harassment case prompted Thiam to ask an internal conduct and ethics board for recommendations to improve how Credit Suisse responds to such complaints. The board suggested the new role.
Punched and choked: Goldman Sachs has fired Joe Karwosky, a vice president in its asset management division, after he was arrested two times in 13 months for attacking a woman. The reason Goldman gave in a filing: he didn’t give "accurate information" about events outside of the bank. In April 2017, Karwosky’s girlfriend told police he punched her, and in a separate incident two months ago, he was charged with strangulation, a felony. Goldman said it learned of both arrests at the same time and immediately placed Karwosky on leave and began an investigation. The 35-year-old Karwosky maintains his innocence. He had joined Goldman eight years ago from UBS.
More high-risk behavior: Bill De Leon, Pimco's head of risk management, resigned July 20 following an internal investigation into allegations that he had inappropriately touched a lower-ranking colleague in May 2017. He also had an issue this spring where he had to apologize for allegedly verbally harassing two women who work for the International Swaps and Derivatives Association, according to Barron’s. The incident happened at an unofficial after-hours event during the ISDA’s annual conference in April.
Fast rebound: Last September, the board of the online lender Social Finance ousted its chief executive, Mike Cagney, over charges of sexual misconduct and “frat house” behavior at the company. Since then he has raised a total of $58 million to start a new online lender called Figure, which plans to have its own cryptocurrency and blockchain. In the wake of the SoFi scandal, Cagney found his footing even faster than his former company did, the New York Times wrote. The resurgence of Cagney and others in Silicon Valley toppled in the #MeToo era is being enabled by the startup ecosystem, where money is plentiful and many are eager to bet on experienced entrepreneurs.
Update from D.C.
What would Waters do?: Should Democrats take control of the House in the 2018 midterm elections, Rep. Maxine Waters would make fixing Fannie Mae and Freddie Mac one of her top priorities. She also talked about “undoing” the harm caused by Mick Mulvaney as acting director of the Consumer Financial Protection Bureau and holding top executives of the biggest banks accountable for harm caused to customers.
Roger dodger: The Senate Banking Committee will vote Thursday on the nomination of Kathy Kraninger to become director of the CFPB. Her nomination hearing had been all heat and no light, as Kraninger avoided telling the committee much at all in three hours of grilling. Four Democrats on the committee — among them Sens. Elizabeth Warren, D-Mass., and Catherine Cortez Masto, D-Nev. — followed up by sending 10 pages of questions to Kraninger, with several of those pages devoted to asking about her role in the now-rescinded immigration policy that separated children from their parents at the U.S. border. At the hearing, when Kraninger repeatedly deflected questions about the controversial policy, Warren flatly declared that Kraninger had been involved in it, saying “it’s a moral stain that will follow you for the rest of your life.” Allied Progress, the consumer watchdog, is not dropping its pursuit of information about Kraninger either, with a lawsuit being its latest move.
Anne Richards is joining Fidelity International as its new CEO in December, reporting to chairman Abby Johnson. Richards, who is described as one of the most powerful women in London, is the CEO of M&G Prudential, the investment arm Prudential is planning to spin off. At Fidelity International, Richards will succeed Brian Conroy, who left the firm as president in February to return to U.S.-based Fidelity Investments. Fidelity International’s assets total 316 billion pounds, or $414 billion, to M&G Prudential’s 351 billion pounds, putting both among Britain’s largest companies, according to Bloomberg. Separately, Prudential announced that Clare Bousfield, who was hired from Aegon in 2016, would become chief financial officer of M&G Prudential.
Macquarie Group has announced that Shemara Wikramanayake, the head of its asset management arm, will be its next CEO. She will succeed a retiring Nicholas Moore to become the Australian investment bank’s first female leader. By helping set up and grow the asset management unit into Macquarie’s most successful division, Wikramanayake, 56, has been central to Macquerie’s strategy of offseting the high volatility of traditional investment banking and capital markets businesses with more stable units such as funds management. Wikramanayake, who is of Sri Lankan descent, said she’s never encountered barriers on her path to the top, despite the fact she’s “in a lot of minority groups.” Asked about her priorities, she said, “For me the first thing is to persuade girls what a great career this is.” Wikramanayake is only the second woman to lead a major financial institution in the country, after former Westpac CEO Gail Kelly. But her appointment is important even beyond Australia, as the Financial Times pointed out, calling it “a significant landmark for women in the global investment banking industry.” Macquarie shares fell after the announcement.
Nelnet, the nation's largest servicer of federal student loans, has filed an application to establish an industrial loan bank, tapping veteran banker Andrea Moss to manage the application process. Moss also would lead Nelnet Bank if the application is approved by the Utah Department of Financial Services and the Federal Deposit Insurance Corp. Nelnet’s plan is to create an online bank focused on gathering deposits and making private student loans. Moss recently stepped down as president of the $8.3 billion-asset Comenity Capital Bank in Salt Lake City, which is itself an industrial loan bank.
Emergency situation: The personnel chief of the Federal Emergency Management Agency is under investigation after being accused of creating an atmosphere of widespread sexual harassment in which women were hired as possible sexual partners for male employees, the Washington Post reported in a jaw-dropping story that includes detailed allegations of wrongdoing. Some of the behavior by Corey Coleman, who reportedly created a “toxic” environment in the human resources department going back to 2011, could rise to the level of criminal activity, according to the agency’s administrator, William “Brock” Long. He described “a systematic problem” and said others beyond Coleman – who resigned June 18 before a scheduled interview with investigators – will be held accountable. “The biggest problem I may solve here may be the eradication of this cancer,” said Long, a Trump appointee who has been in his role for 13 months and initiated the investigation after receiving a complaint directly from an employee last year. One of the steps being taken at FEMA is similar to what Credit Suisse did: Long is creating a new office to investigate allegations of sexual misconduct.
Anger and influence: When men express anger, they gain influence, but women have the opposite experience: they lose influence among both men and women, several studies have found. “When women express anger, people tend to think it’s because of something internal to her. She is an emotional person. There’s something inside of her that is unhinged. Whereas for men, people assume that there’s an external and valid cause to it,” the author of the studies, Jessica Salerno, a psychology professor at Arizona University, said in a WNYC podcast. But the #MeToo movement is helping shift the gender bias, she added. “It’s a lot harder to put a woman in the box of the crazy, ranting woman,” when a large number of women are expressing their anger.
Chental-Song Bembry contributed to this report.