Mike Cagney, the co-founder and chief executive of financial services startup SoFi, stepped down from the company Friday amid allegations that he fostered a culture at the company that enabled sexual harassment at its headquarters in San Francisco and satellite office in Healdsburg.
Tom Hutton, the company’s executive chairman, will become interim CEO.
“The business is strong, stable and well-positioned,” Hutton said in a statement. “For now, there is no more important work than paving the way for future success by building a transparent, respectful and accountable culture.”
Cagney, who co-founded the company also known as Social Finance Inc. in 2011, also left the board.
SoFi declined to comment further on the matter, which came following a brutal week for the company.
Cagney had written a memo to SoFi employees on Monday saying, “HR-related litigation and negative press” related to an August lawsuit had become “a distraction from the company’s core mission.”
In the memo, he announced he was stepping down as chairman but would stay on as chief executive until the end of the year to help find his replacement and facilitate a transition of power.
The following day, the New York Times published a story in which more than 30 current and former SoFi employees detailed a “frat house” culture at the firm and accused Cagney of flirting with employees and using questionable tactics to grow the company.
Brandon Charles, a former SoFi employee in the Healdsburg office, sued the company last month, alleging managers sexually harassed subordinates, improperly recorded loans to boost their pay, and canceled some loan applications rather than report errors that could impact their quarterly performance bonuses.
He said SoFi had fired him for trying to report bad practices at the company, including sexual harassment by a manager at the Healdsburg office and the mishandling of loan applications at another office in Salt Lake City.
On Aug. 31, Charles amended the suit to include Cagney as a named defendant, alleging the CEO made sexual comments about female employees and fostered a culture that allowed sexual harassment to continue unabated.
Another former Healdsburg employee, Yulia Zamora, told The Press Democrat that she contacted a lawyer after she quit the company, and that supervisors at the company engaged in bathroom and parking lot trysts with female employees.
In the wake of the New York Times story — and amid heightened sensitivity at Bay Area tech startups around sexual harassment — Cagney’s sudden resignation was not surprising.
In June, Uber’s co-founder and former CEO Travis Kalanick — who was not personally implicated in sexual harassment allegations but was blamed by former employees for creating a culture that allowed it to happen — initially went on an indefinite leave of absence being pressured to resign a week later.
The same month, Binary Capital co-founder and investor Justin Caldbeck took a leave of absence after he was accused of sexually harassing female tech entrepreneurs. He resigned days later.
Around the same time, Dave McClure, a general partner at 500 Startups, faced similar allegations of inappropriate advances toward female entrepreneurs. McClure admitted to and apologized for being a “creep” and announced that he would be moving to a limited role at the company. He resigned shortly thereafter.