Wall Street faces a reckoning over #MeToo—and mandatory arbitration
Good morning. Fortune Senior Writer Maria Aspan here.
Five years after #MeToo went viral, the financial industry has remained relatively untouched by any sort of visible reckoning over gender bias and sexual harassment. But that may be about to change, as two long-simmering lawsuits head towards trial this spring, I recently reported for this Fortune feature.
One of the lawsuits is a class-action alleging gender discrimination at Goldman Sachs, according to 1,400 plaintiffs who are current and former employees. It’s an incredibly hardy case that began 17 years ago–yes, all the way back in 2005—when former Goldman vice president Cristina Chen-Oster left the bank and filed a gender-bias complaint with the U.S. Equal Employment Opportunity Commission. (After the EEOC closed its investigation, Chen-Oster filed suit in 2010.) The other is an individual lawsuit brought by Sara Tirschwell in 2018 against her former employer, bond-giant TCW Group, alleging that she had been sexually harassed by her boss and then fired in retaliation for reporting it.
Goldman Sachs, TCW, and Tirschwell’s former manager all deny the respective allegations. Tirschwell’s lawsuit is now scheduled to go to trial in May, followed by a June trial date for the Goldman Sachs class-action lawsuit.
Regardless of what happens next, it’s kind of amazing that either lawsuit has survived to this point—or even exists in the first place. Big banks, like many large employers, often require their employees to sign mandatory arbitration agreements, which keep all kinds of workplace disputes out of court—and out of the public eye. About 60 million workers are subject to forced arbitration, according to a 2018 report from the left-leaning Economic Policy Institute.
Both Chen-Oster and Tirschwell told me that they were only able to file suit—and talk to me—because they hadn’t been required to sign arbitration clauses when they worked for the companies they’re now suing. And it’s clear that this was the exception, rather than the rule: In an almost 30-year career on Wall Street, “TCW is the only place that I worked where I didn’t have an arbitration clause,” as Tirschwell puts it.
Starting in late 2017, the #MeToo movement drew plenty of public scrutiny to these arrangements, thanks in part to the ongoing advocacy of former Fox News anchor Gretchen Carlson. Some big tech companies and financial firms—including Google, Facebook, and Wells Fargo—eventually eliminated arbitration clauses for sexual misconduct claims.
But employers’ overall reliance on arbitration has continued to climb: Between 2018 and 2020, the number of employee disputes that were resolved in arbitration rose 66%, according to a report last year from the American Association for Justice.
A new federal law, signed by President Biden in March, decrees that employers can no longer force sexual misconduct claims into arbitration. However, the law does not apply to claims of gender bias or any other discrimination—which are at the heart of the Goldman Sachs class-action lawsuit. And Goldman, which in 2021 defended its use of arbitration clauses for sexual harassment despite shareholder pressure, spent the past 12 years successfully fighting to send many of Chen-Oster’s fellow plaintiffs to arbitration.
(In emailed statements, a Goldman spokesperson says the bank “has a long and distinguished record of supporting and promoting women,” and has “zero tolerance for discrimination, harassment, or retaliation of any kind,” while a TCW spokesperson says the company has a “longstanding commitment to a diverse and inclusive culture, and has zero tolerance for any form of harassment or discrimination.”)
Whatever the ultimate outcome of these two lawsuits, their very existence—and endurance—sheds some light onto claims that many, many more employees aren’t allowed to air publicly. As Chen-Oster puts it: “Arbitration doesn’t allow for things to be more broadly broadcasted, or for there to be greater consequences.”
Read the full story here.
Jackson Fordyce curated the deals section of today’s newsletter.
- Cover Genius, a New York-based insurtech for embedded insurance, raised $70 million in Series D funding. Dawn Capital led the round and was joined by investors including Atlas Merchant Capital, GSquared, and King River Capital.
- Roam, a remote-based cloud HQ company for distributed teams, raised $30 million in Series A funding led by IVP.
- Vaxess, a Cambridge, Mass.-based vaccine patch developer, raised $27 million in Series B funding. RA Capital Management led the round and was joined by investors including MIT’s The Engine, Mission BioCapital, and Global Health Investment Corporation.
- MedCrypt, a San Diego-based cybersecurity solution provider for medical devices, raised $25 million in Series B funding. Intuitive Ventures, Johnson & Johnson Innovation, Section 32, Eniac Ventures, Anzu Partners, and Dolby Family Ventures invested in the round.
- Carta Healthcare, a San Francisco-based clinical data management company, raised $20 million in Series B funding. Paramark Ventures, Frist Cressey Ventures, American College of Cardiology, Asset Management Ventures, CU Healthcare Innovation Fund, Mass General Brigham, Maverick Ventures Investment Fund, and Storm Ventures invested in the round.
- Way, an Austin-based brand activations software platform, raised $20 million in Series A funding. Tiger Global led the round and was joined by MSD Capital.
- Galileo, a San Francisco-based machine learning data intelligence company, raised $18 million in Series A funding. Battery Ventures led the round and was joined by investors including The Factory, Walden Catalyst, FPV Ventures, and other angels.
- Fringe, a Richmond, Va.-based lifestyle benefits startup, raised $17 million in Series A funding. Origin Ventures and Felton Group co-led the round and were joined by investors including Sovereign’s Capital, Revolution Rise of Rest, ManchesterStory Group, Anchormark Holdings, and others.
- GoCo.io, a Houston-based software solutions provider for HR, benefits, and payroll, raised $15 Million in funding led by ATX Venture Partners.
- AiDash, a San Jose-based satellite and A.I.-powered operations, maintenance, and sustainability solutions provider, raised $10 million in funding from SE Ventures.
- Haven, a New York-based homeownership platform for mortgage servicers and subservicers, raised $8 million in Series A funding. Fifth Wall led the round and was joined by investors including Fidelity National Financial, RWT Horizons, 1Sharpe Ventures, Conversion Capital, BoxGroup, AME Cloud Ventures, and Operator Partners.
- Retirable, a New York-based retirement solution provider, raised $6 million in funding. Primary led the round and was joined by investors including Vestigo Ventures, Diagram, Portage, and Primetime.
- Tiny Health, an Austin-based gut health testing company, raised $4.5 million in funding led by TheVentureCity.
- Sunsave, a London-based solar energy subscription provider, raised £3.7 million ($4.25 million) in seed funding. Neurone Ventures, Plug & Play Ventures, and other angels invested in the round.
- iink Payments, a Tampa-based digital payments network, raised $3 million in seed funding. Grand Ventures led the round and was joined by investors including Springtime Ventures, Simplex Ventures, Motivate Venture Capital, and Green Egg Ventures.
- Howbout, a London-based app for making plans with friends, raised £1.92 million ($2.2 million) in funding. ACF Investors, Snap Inc. senior advisor Claire Valoti, and ex-Paypal and Skype investor Desigan Chinniah invested in the round.
- Heylo, a San Francisco-based community group organization development platform, raised $1.5 million in seed funding led by Worklife Ventures.
- Cinven agreed to acquire TaxAct, a Dallas-based tax filing assistance software and services provider, from Blucora for approximately $720 million. Pending a deal, Cinven will combine TaxAct with its existing portfolio company Drake Software.
- Coastal Chemical, a Brenntag Company, acquired Tech Management, the Houston-based production chemicals platform of Gravity, backed by affiliates of Clearlake Capital Group. Financial terms were not disclosed.
- Johnson & Johnson agreed to acquire Abiomed, a Danvers, Mass.-based heart-pump maker, for about $17.3 billion.
- Bluefin acquired TECS Payment Systems, a Vienna-based payment solutions provider to acquirers, payment service providers, and POS system providers. Financial terms were not disclosed.
- Bluewave Technology Group acquired Virtual Telecomm, a Louisville-based technology advisory and IT transformation agency. Financial terms were not disclosed.
- Emplifi acquired Pixlee TurnTo, a San Francisco-based user-generated content, ratings and reviews, and influencer marketing solutions provider. Financial terms were not disclosed.
- Kajabi acquired Vibely, a Belmont, Calif.-based community-building platform for creators. Financial terms were not disclosed.
FUNDS + FUNDS OF FUNDS
- Align Capital Partners, a Cleveland and Dallas-based private equity firm, raised $620 million for its third fund focused on lower-middle market companies.
- Advent International, a Boston-based private equity firm, hired Heather Kennedy Miner as managing director. Formerly, she was with Goldman Sachs.
- Edison Partners, a Princeton, N.J.-based growth equity investment firm, hired Rush Baker as partner and head of investor relations, and Casey Myers as partner and head of Edison Edge. Formerly, Baker was with Snowbridge Advisors and Myers was with SundaySky.
- Motive Partners, a London and New York-based private equity firm, hired Bridget van Kralingen as partner. Formerly, she was with IBM.