Published On: Wed, Sep 13th, 2017

SoFi CEO and Co-Founder to Step Down

The CEO and co-founder of Social Finance, better known as SoFi, is stepping down by the end of the year, according to a report from the New York Times. Mike Cagney’s resignation comes after a lawsuit was filed over alleged sexual harassment.

photo by Carrie Z. via pixabay

Several former employees have come forward to reveal that Cagney had inappropriate relationships with company employees. These relationships, they say, created a toxic work environment.

People knowledgeable of the situation also told the Times that Cagney has been too aggressive in his pursuit of growing the online lending company, putting compliance and risk controls in jeopardy.

Cagney sent a letter to employees on Monday announcing his resignation and had begun the search for a new CEO.

“The combination of HR-related litigation and negative press have become a distraction from the company’s core mission. I want SoFi to focus on helping members, hiring the best people, and growing our company in a way consistent with our values,” said Cagney in the letter. “That can’t happen as well as it should if people are focused on me, which isn’t fair to our members, investors, or you.”

SoFi’s board has elected Tom Hutton, a board member and early investor, to take over as chairman.

Former company employee Brandon Charles sued the company last month, alleging that he was fired for speaking out against a manager who openly discussed sexual acts with younger female employees. The suit was later amended to name Cagney as a defendant.

Charles claimed that Cagney’s actions created a company culture that allowed sexual harassment to continue.

Cagney’s resignation comes at a tumultuous time for the company. Earlier in the year, SoFi lost its chief revenue and chief financial officers.

The move also comes at a time when the company is still mulling over an initial public offering and pursuing a bank charter.

Social Finance, founded in 2011, began in the refinancing industry. The lender refinanced student loans, primarily from students who attended prominent universities. SoFi has since branched out to offer mortgages, personal loans and investment accounts.

SoFi has been valued at $4 billion and has raised $2 billion from its investors, which include Baseline Ventures, SoftBank and Discovery Capital.

The San Francisco-based company is one of the hottest personal finance startups. Revenue is up 67% year-over-year and generated $134 million in the second quarter of the year. In that same quarter, SoFi funded $3.1 billion in loans, according to USA Today.

The company says it has thus far lent more than $20 billion to over 350,000 people.

“I believe now is the right time for SoFi to start the search for a new leader,” said Cagney. “I could not be more proud of the company we’ve built together, and I look forward to passing the baton to a new C.E.O. who can continue SoFi’s mission of revolutionizing personal finance, helping our members to get ahead and find financial success.”

SoFi’s recent legal trouble echoes problems in other technology sectors. Uber, another San Francisco company, also faced allegations of sexual harassment and misconduct. Venture capitalists have also faced scrutiny over their alleged treatment of female entrepreneurs.

Author: Jacob Maslow

About the Author

- Outside contributors to the Dispatch are always welcome to offer their unique voices, contradictory opinions or presentation of information not included on the site.

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