SoFi CEO Mike Cagney is out.
Or at least he will be, by the end of the year. Following allegations of sexual misconduct and fraudulent actions by managers, Cagney announced in a memo to employees at the country's biggest online lender that he would be stepping down.
He explained that the distraction of the lawsuit was hindering the growth of SoFi. Although he said that he “could not be prouder of the company we’ve built together," he noted that "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,” he wrote. “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.”
Social Finance Inc. is one of the most highly valued private financial technology startups in the U.S. Cagney co-founded the company in 2011, with the aim of giving graduates the opportunity to fund loans to undergraduates. The company quickly diversified, becoming an online lender for other products, such as mortgages and consumer loans, and by 2016, SoFi was funding billions of dollars of loans each quarter.
The rapid growth of the company attracted funding from heavy hitters including SoftBank and private equity group Silver Lake, but things happening internally caused some to take pause. A former employee filed a lawsuit in August alleging that he had been wrongfully terminated after reporting sexual harassment of colleagues. SoFi then launched an outside investigation around allegations of sexual harassment. The New York Times has reported that people familiar with the matter have alleged that Cagney himself has had at least one inappropriate relationship with a female employee.
SoFi is not the only high-profile Silicon Valley company to lose its CEO in recent months. Uber CEO Travis Kalanick stepped down in June, and Justin Caldbeck of the venture capital firm Binary Capital left the firm in July, following allegations of sexual misconduct.