- Thomson Reuters
Social Finance has gone on the defensive following reports that problems within the internet financing company may go well beyond its cofounder, Mike Cagney.
Cagney on Monday resigned as chairman and announced he will step down as CEO by the end of the year amid allegations of widespread sexual harassment at the company, which is also known as SoFi. But an article in The New York Times reported on Tuesday indicated the company has more to worry about than how it treats women and detailed a series of questionable business practices.
Later that day, the company fired back at The Times via a letter posted on its website. Although it largely ignored the reports in the The Times about sexual misconduct at the company, SoFi disputed several points in the article concerning its business, saying they were inaccurate.
SoFi said it wouldn’t “address every inaccuracy in the story.”
“However,” it added, “we have some issues with the story that we want to address.”
The article alleged that SoFi’s growth could be attributed in part to a series of risky business lending habits. Cagney misrepresented SoFi’s student loan products to investors and asked customer service representatives to review and approve personal loans, even though they were not qualified to do so, according to the article.
But in its letter, SoFi denied that customer service representatives ever approved loans. Instead, senior loan officers have authority over whether to make loans, and the company uses proprietary algorithms that look at applicants’ credit history to determine their credit worthiness, SoFi said.
The Times’ reporting on the role its customer service representatives played “reflects a lack of understanding of our business,” the company said.
In response to allegations that the company did not sufficiently vet incomes for mortgage borrowers, SoFi wrote, “This is an incredibly vague claim, and we have no idea what this means.”
“Not only are we good at making loans, those loans outperform the industry,” the company wrote.
In its letter, SoFi did not directly address charges in The Times report that it mislead investors in 2012 about a new loan product. According to The Times, the company told investors that it had received $90 million in debt financing to fund the new loan product when it actually hadn’t secured that financing. SoFi later bought back the related loans from investors, according to The Times.
In addition to raising questions about SoFi’s business practices, The Times’ article detailed multiple charges of sexual harassment and escapades at the company.
Despite being married and having his wife work in the office with him, Cagney pursued at least two of his female employees and sent one of them sexually explicit text messages, according to The Times report. The company’s chief financial officer offered to pay a bonus to female employees for losing weight and talked aloud about women’s breasts, according to the report. And some employees said they’d seen colleagues at the company having sex with their superiors, The Times reported.
In its letter, SoFi wrote that it takes “disturbing anecdotes about staff behavior” seriously.
SoFi is only the latest in a string of Silicon Valley companies facing accusation of sexual harassment and hostile work environments.
Uber cofounder Travis Kalanick was pressured to resign in June from his role as the company’s CEO after an internal investigation uncovered numerous charges of sexual harassment. The investigation was spurred by a blog post by a former engineer who described a culture of sexism at the company.
Dave McClure, founder of 500 Startups, resigned as general partner of the incubator in July after The New York Times ran a story accusing McClure of inappropriate behavior. A few weeks later, Kris Duggan stepped down from his role as CEO of BetterWorks following a lawsuit that claimed a hostile work environment.