Firecracker, Love Letters Ignite #MeToo Moment in Finance
(Bloomberg) -- Wafra Investment Advisory Group Inc. fired its head of real estate amid claims of sexual harassment, becoming the latest big investor embroiled in the #MeToo movement.
Francis “Frank” Lively was ousted in April after allegations by Sabine Kraut, a vice president at the Kuwait-backed firm, according to a complaint filed in New York Friday with the Equal Employment Opportunity Commission. Kraut, 45, said the harassment went on for at least six years, with Lively, 63, pursuing a romantic relationship despite her refusals. She alleges he made repeated physical advances on business trips, forcing her to change her travel accommodations, and sent her gifts and love letters.
“Wafra is committed to a safe and welcoming environment for all of our team members,” a spokesman for the New York-based firm said in a statement. “We were made aware of these allegations for the first time in the middle of April 2018. Following an immediate internal investigation Wafra took appropriate action.”
The dismissal of Lively is the latest example of the #MeToo movement’s spread through the financial sector, where fewer stories of high-profile, powerful men engaging in misconduct and gender inequity have emerged than in industries such as entertainment and media. Wafra is beneficially owned by the Public Institution for Social Security of Kuwait.
Lively didn’t respond to multiple requests for comment left with his attorney and son.
Erik Gordon, a professor at the University of Michigan Ross School of Business, said it’s positive that #MeToo situations on Wall Street are coming to light. “Powerful people in every industry need to see that they are not exempt,” he said.
Kraut, who joined the firm in 2004 in a part-time capacity before becoming a full-time employee the following year, laid out multiple allegations in the complaint, which lists both Wafra and Lively as defendants. She contends that her career was stunted and that she was passed over for promotions in favor of male colleagues because she rebuffed Lively’s advances.
Hot as ‘Firecracker’
Beginning in 2012 when Lively became her direct manager, Kraut says she was subjected to pervasive, continuous and egregious sexual harassment. As recently as this March, Lively arrived uninvited at Kraut’s home in New York City, the complaint says, causing her to fear for her safety.
Lively had previously made unwanted advances -- physically, verbally and via electronic messaging -- on business trips to destinations including Monaco, Dubai, France and Amsterdam, Kraut alleges. On these trips, he once forcibly kissed Kraut and, on another occasion, touched her thigh.
Attached to the complaint was a transcript of a taped conversation in a car en route to a meeting in New York last October. The complaint alleges that during the conversation Lively said the past six years of Kraut’s rejection was “beyond torture,” and said that she had “done nothing to encourage’’ his actions.
On a trip to Kuwait, Kraut was able to request a room on a different floor from Lively’s, something that was not always an option because she alleges he had control over her travel itinerary. It’s not unusual for co-workers to be booked in adjacent rooms or in adjacent seats on flights by their travel representatives.
Lively sent letters and poems to Kraut, according to the complaint. One handwritten note in July 2012 stated: “I think you are as hot as a firecracker” and came with an actual firecracker.
In another letter, he wrote, “If we continue to work together, I will always have the small pleasures of innocently taking your hand to examine your thumb and with that touch, feeling eight miles high, or taking your arm to whisper something to you at a meeting and catching that wonderful scent of you.”
He gave Kraut gifts including a Cartier bracelet and an antique pearl necklace, according to the complaint. Kraut said Lively often called her “Schatzie”, a German word for “darling.’’
While it’s rare for current employees to take action against their firms, it has occurred elsewhere on Wall Street. Lauren Bonner, still an executive at Point72 Asset Management, filed a gender-discrimination lawsuit against Steven Cohen and his firm in February. Point72 has denied the allegations of discriminatory conduct.
Kraut contends that even after Lively’s dismissal her career has been derailed. She says the firm has excluded her from senior leadership meetings and diminished her responsibilities, including removing her from a specific real estate deal involving a hotel.
Kraut declined to comment. Her attorney Milton Williams at Walden Macht & Haran LLP said in an interview that his client had “been through a terrible ordeal. She looks forward to vindicating her rights in court.”
Lively, who joined the firm in 1997 and was a senior managing director overseeing Wafra’s real estate efforts at the time of his termination, has been investing in property for decades. He’s been chairman and treasurer of the Association of Foreign Investors in Real Estate, an industry group that includes members from heavyweights such as the Abu Dhabi Investment Authority and Blackstone Group LP.
Established in 1985, Wafra has $20 billion under management in strategies including hedge funds, equities, fixed income and real estate. It holds stakes in private equity firms including TSG Consumer Partners, TowerBrook Capital Partners and ArcLight Capital Partners.
Kraut’s case isn’t the only legal issue for Wafra. Its former head of securities, Christopher Leary, has filed a complaint in U.S. District Court alleging discrimination.
Leary claims he was terminated in August 2017 after taking two months of medical leave in 2016. Wafra denies these allegations, according to court filings.
©2018 Bloomberg L.P.