One month after reports of a sexual harassment and wrongful termination lawsuit against the online lending startup Social Finance came to light, the company has announced that its hard-charging chief executive Michael Cagney will be stepping down at the end of the year.
The company said that it has already begun a search for Cagney's successor and that he will remain in the executive role until a replacement is found.
Cagney, who will also step away from the company's board of directors (where he served as executive chairman), becomes the latest CEO in Silicon Valley to be brought down by allegations of sexual misconduct among his company's staff.
Earlier this year, Uber's chief executive, Travis Kalanick, was forced out of the company amid complaints of sexual harassment and a toxic work environment (along with other issues).And the venture capitalists who finance companies like SoFi and Uber have also been forced out due to instances of sexual misconduct.
“I believe now is the right time for SoFi to start the search for a new leader,” Cagney said, in a statement. “I could not be more proud of the company we’ve built together, and I look forward to passing the baton to a new CEO who can continue SoFi’s mission of revolutionizing personal finance, helping our members to get ahead and find financial success.”
SoFi, an online lender that has become a powerhouse in financial technology circles, made its name refinancing student loans. But the startup, which has raised nearly $2 billion since its launch in 2011 has since moved on to all kinds of lending services.
The company's board of directors has named, Tom Hutton, an investor in the company and the managing director of financial technology investment firm XL Innovate as the company's new executive chairman.
“With Mike at the helm, SoFi has become a major, innovative player in consumer finance. We are grateful for all he’s done to help build this remarkable company,” Hutton said, in a statement. “We’re confident that we can find and hire a great CEO to continue that innovation and drive excellent financial performance.”
The company also said that Steven Freiberg, SoFi's acting CFO and a member of the SoFi board, will take on additional duties as the company's vice chairman. Freiberg, had previously served as the CEO of of E*Trade and co-chairman and CEO of Citigroup’s Global Consumer Group.
In a message on the company's internal blog, Cagney wrote about the rationale behind his decision to step down.
Recently, though, the focus has shifted more toward litigation and me personally. 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. 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.
I will be fully dedicated to the business through year-end, and will work closely with the Board to find the best candidate to lead us forward.
SoFi funded $3.1 billion in loans, generating over $134 million in revenue and $61.6 million in adjusted EBITDA, in the second quarter alone. The company said it has issued over $20 billion in loans since its launch.