Booming SoFi’s CEO Mike Cagney quits amid sexual harassment claims

San Francisco online lending firm SoFi has been a poster child for startup success. The company, which started with student loan refinancing and branched out, has seen growth so explosive since its 2011 launch that last quarter it funded $3.1 billion in loans.

In six years SoFi has gone from five people with big ideas in a small office to a financial technology empire valued at $4 billion, with 1,100 employees.

Now, amid claims of sexual harassment at the company, a head’s going to roll — from the very top.

“It is with a heavy heart that I am announcing that I will step down as CEO of SoFi by the end of
this year,” co-founder and CEO Mike Cagney wrote in a company blog post Sept. 11.

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Cagney’s resignation is not entirely surprising — on Sept. 1, he published on the blog a note to SoFi employees, saying the firm’s legal team had discovered that a lawyer was trying to gather “information relating to alleged sexual harassment at the company.”

Outgoing SoFi CEO Mike Cagney (courtesy of SoFi)

Several people, Cagney wrote, were prepared to make formal allegations that they experienced or witnessed “improper activity” at SoFi’s office in Healdsburg.

Cagney’s statement came after the company in August said there was no merit to claims in a lawsuit by a former employee who alleged he was fired for reporting sexual harassment of colleagues.

Brandon Charles had worked in SoFi’s loan-processing office in Healdsburg. He said in his suit that after reporting to the company that his manager had made explicit sexual comments and lewd gestures, he was told that making such a complaint fell outside his duties and he was fired, the New York Times reported Aug. 11.

SoFi said in August that Charles’ claims, some of them quite lurid — were “investigated in depth by the company and found to have no merit.”

Cagney, in his latest blog post, did not discuss whether there was merit to any claims of harassment, and none such claims have been proven. Instead, the CEO deployed the classic “I’ve become a distraction” exit line.

“Recently … the focus has shifted more toward litigation and me personally,” said Cagney, 46.

“The combination of HR-related litigation and negative press have become a distraction from the company’s core mission.”

And Cagney indeed recently became a focus of discussions about alleged improper behavior at the company. Just a day before he announced his planned departure, the company’s troubles were the subject of a report in the national news media.

“In interviews, nearly a dozen current and former employees working in various departments told The Wall Street Journal that some executives, including the company’s former finance chief, engaged in or tolerated what they described as improper behavior toward women in recent years,” the WSJ reported (paywall) Sept. 10.

The firm’s former chief financial officer, Nino Fanlo, told the WSJ that from time to time he’d compliment men and women on their outfits and touched men’s and women’s shoulders in a friendly way. “It wasn’t sexual,” he reportedly said.

Cagney was named in the article as well:

“Separately, SoFi’s board disclosed after questioning from the Journal that in 2012 it paid money to settle a dispute between a lower-level employee and (Cagney),” the paper reported.

“The nature of the dispute isn’t known, but the board said it didn’t involve a sexual relationship.”

SoFi is far from the only high-flying Bay Area tech company to be hit by sexual harassment allegations, and Cagney is not the only CEO to feel the sting. Most prominent among firms that have seen turmoil and suffered reputation damage over bad behavior by men toward women is Uber, whose former CEO Travis Kalanick stepped down in the wake of allegations of sexual harassment at the ride-hailing giant.

 

Photo: From a SoFi company event in San Francisco (courtesy of SoFi)

 

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