BlackRock Executive Ousted for Failing to Disclose Personal Relationship -- 3rd Update

Date : 12/06/2019 @ 12:15AM
Source : Dow Jones News
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BlackRock Executive Ousted for Failing to Disclose Personal Relationship -- 3rd Update

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By Dawn Lim 

A contender for the top job at BlackRock Inc. was ousted from the money-management giant for failing to disclose a relationship with an employee who reported to him, the latest high-profile instance of executive misconduct at a major U.S. company.

Mark Wiseman rose from Canada's public-pension world to become a protégé to BlackRock chief Laurence Fink. The firm on Thursday said in an internal memo that he was departing the company for violating policies.

Mr. Wiseman is the second high-ranking BlackRock executive to leave the firm in recent months due to breach of company policy.

The abrupt dismissal comes as American corporations continue to grapple with the issue of workplace relationships and concerns over harassment.

McDonald's Corp. last month said it fired Chief Executive Steve Easterbrook because of a consensual relationship with an employee. Last year, Intel Corp. said Chief Executive Brian Krzanich resigned for violating company policy by having a relationship with a co-worker.

"Our culture has always been one of BlackRock's greatest strengths, and it is deeply disappointing that two senior executives have departed the firm in the same year because of their personal conduct," Mr. Fink and President Rob Kapito said in an internal memo Thursday. "This is not who BlackRock is."

They added the firm moves quickly to address breaches of policy or conduct that it doesn't see as aligned with its values.

BlackRock exploded into a nearly $7 trillion behemoth over the last decade as the revolution it helped steer in exchange-traded funds and index funds reshaped the investment world. The firm can cast votes that determine everything from who sits on a company board to how executives deal with corporate governance. How it policies its own workplace culture affects its credibility and clout over other companies.

Mr. Wiseman didn't respond to a request for comment. In a separate internal BlackRock memo Thursday, the 49-year-old executive was quoted as saying, "I engaged in a consensual relationship with one of our colleagues without reporting it. I regret my mistake and I accept responsibility for my actions."

Mr. Wiseman is married to Marcia Moffat, a BlackRock executive who heads the firm's Canada business. The two were seen as a power couple at the world's largest asset manager. The relationship that Mr. Wiseman failed to disclose was with a different woman who reported to him, according to people familiar with the matter.

BlackRock requires employees to disclose romantic relationships with direct subordinates or other colleagues. A person familiar with the matter said this allows it to decide if staffers need to change jobs if a relationship could cause favoritism, conflicts of interest or other issues.

Earlier this year, Jeff Smith was asked to leave his position as global head of human resources for failing to adhere to company policy, according to an internal memo reviewed by The Wall Street Journal.

His firing marked a sudden exit for a BlackRock veteran. Mr. Smith had ascended in the firm as human resources became increasingly important for a company that had undergone explosive growth. Mr. Smith couldn't be reached for comment Thursday.

Mr. Wiseman joined BlackRock in 2016 from Canada's pension investor, the Canada Pension Plan Investment Board. He was among half a dozen candidates vying to succeed Mr. Fink.

Although BlackRock is best known for funds that mirror markets and trade rapidly, Mr. Wiseman became the face of a push to expand beyond indexed products and exchange-traded funds. He headed BlackRock's approximately $300 billion active equities business and directed strategy for another roughly $170 billion business focused on private equity and other alternative investments.

One of the tests Mr. Wiseman faced at the firm was raising a megafund modeled after Warren Buffett's Berkshire Hathaway. That bid to turn BlackRock, king of the low-fee exchange-traded fund, into a private-equity titan went slower than expected. A plan created in 2018 to raise at least $12 billion for that fund fell behind schedule.

Mr. Wiseman confided to associates over the past year that he was frustrated by the difficult fundraising, according to people familiar with the matter. BlackRock pledged $500 million from its own balance sheet to close the first round at $2.75 billion in 2019.

Mr. Wiseman's departure triggers an automatic suspension of all new deals from that fund. The firm will have to get permission from a handful of key investors to continue investing. BlackRock said Mr. Kapito, the firm's president, would become chairman for that fund, and investment decision-making remains unchanged as the firm remains committed to the strategy.

The active-equity business that Mr. Wiseman was tasked to revamp continues to face intense competition from index funds. His 2017 overhaul of the business involved layoffs, pricing changes and making algorithms a bigger part of the investment process. Since then, active equities has grown in size but continues to lose ground to other strategies BlackRock runs.

With the departure, BlackRock's alternatives business will continue to be led by Edwin Conway, who heads day-to-day operations, and Jim Barry, who leads investments. The leaders of the various active equity strategies will report to Mr. Kapito while BlackRock assesses how to structure leadership over that business.

Write to Dawn Lim at dawn.lim@wsj.com

 

(END) Dow Jones Newswires

December 05, 2019 19:00 ET (00:00 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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