The CEO of a $4 billion startup is resigning immediately following sexual harassment allegations against the company.
SoFi, a company that provides student loans, personal loans and mortgage refinancing, said Friday that cofounder Mike Cagney is resigning as CEO and a member of the board effective immediately.
The executive shuffle marks an abrupt shift from just four days ago when SoFi said Cagney would step down by the end of the year.
Cagney’s departure follows a lawsuit from a former employee who claimed he was fired from the financial startup after reporting incidents of women being harassed by their managers.
“Recently … the focus has shifted more toward litigation and me personally,” Cagney wrote in a note to employees on Monday announcing his stepping down. “The combination of HR-related litigation and negative press have become a distraction from the company’s core mission.”
However, shortly after SoFi made its original announcement about Cagney stepping down, The New York Times published an explosive report detailing the startup’s “frat house” culture, starting at the very top.
SoFi responded by suggesting the report was filled with inaccuracies.
The damning media coverage shifted the board’s thinking on the CEO transition. The board determined it was no longer “tenable” for Cagney to stay on through the end of the year, according to a source familiar with the matter.
Tom Hutton, SoFi’s executive chairman, is now serving as interim CEO.
The scandal comes amid a broader reckoning in the tech industry over sexism and sexual harassment.
At Uber, a blog post from a former engineer alleging sexual harassment kicked off a months-long investigation into its workplace culture, which played a role in the resignation of its CEO.
Justin Caldbeck, an investor and cofounder of Binary Capital, was forced to resign from his firm in June after he was accused of making unwanted advances to women in tech. Two other prominent investors, Chris Sacca and Dave McClure, also apologized for inappropriate behavior toward women.
SoFi may not be a household name like Uber, but it was nonetheless a darling of Silicon Valley.
The startup raised nearly $2 billion in funding from some prominent investors, including Japanese conglomerate SoftBank. It was said to be valued at more than $4 billion.
SoFi’s stated mission is to revolutionize lending and personal finance. But according to its new CEO, the startup currently faces a more pressing task: becoming more “respectful.”
“For now,” Hutton said in a statement, “there is no more important work than paving the way for future success by building a transparent, respectful and accountable culture.”