By Rob Copeland and Rachel Louise Ensign
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 1, 2018).
Bank of America Corp. fired two employees in its
hedge-fund-focused prime-brokerage unit as it expands an
investigation into potential sexual misconduct in the division,
people familiar with the matter said.
The bank fired the employees after determining they interfered
with the probe of alleged inappropriate behavior by Omeed Malik,
until recently one of the top executives in the unit, the people
said. The fired employees, Valerie Ludorf and Joe Voboril, were
earlier placed on leave, they said.
Mr. Malik was fired in January in the wake of complaints from
female employees about unwanted advances, The Wall Street Journal
earlier reported.
The bank said in a recent Financial Industry Regulatory
Authority filing that Mr. Malik was "discharged [for] personal
conduct in violation of firm standards, including interfering with
the firm's review of the matter."
Bank officials believe Mr. Malik and others sought to throw off
the investigation by trying to coordinate the stories employees
told internal investigators about his behavior, according to the
people. This conduct allegedly included a history of pursuing
relationships with subordinates, the people said.
Marc Kasowitz, an attorney for Mr. Malik, said "Mr. Malik has
not engaged in any sexual harassment and has not interfered with
Bank of America's review of the matter. Any allegation that he did
so is false. The bank was presented with compelling evidence from
multiple employees that the accusations against Mr. Malik were not
credible, and the bank chose to ignore and suppress that evidence,
moving instead to destroy Mr. Malik's career."
The attorney added, "The bank's actions against Mr. Malik, who
is of Middle Eastern descent, were part of a pattern of
discrimination in which white males at the bank have been protected
and rewarded."
An attorney for Mr. Voboril said her client cooperated fully
with the bank's investigation and didn't interfere. "The firm never
alleged that Joe committed any misconduct" before it terminated
him, said the attorney, Kim Michael. "We believe this is part of
Bank of America's attempt to discredit anyone whose truthful
answers didn't fit into their narrative."
Ms. Ludorf didn't respond to requests for comment.
A Bank of America spokesman said the employees no longer worked
at the bank.
The firings represent a new phase of Bank of America's probe
into its prime-brokerage business. This unit encompasses employees
world-wide who pitch hedge funds and other so-called institutional
clients to pay the bank for trade execution, leverage and other
services. Investment banks vie fiercely for the business as a means
of introduction to deep-pocketed customers who may later use other
services like wealth management.
Bank of America historically struggled to compete with rivals
like Goldman Sachs Group Inc. and Morgan Stanley in prime
brokerage. Top executives tried to expand the unit in the wake of
the financial crisis after agreeing to buy Merrill Lynch, which had
a lucrative prime-brokerage arm.
In recent years, the division has been home to allegations of
misconduct, according to current and former employees.
These people said some in the unit were uncomfortable when they
heard a male executive -- who remains with the bank -- had told
fellow employees that he attended the filming of a pornography
video during a business trip to California. He visited the shoot in
his spare time, in the backyard of a friend's house, one of the
people said.
When the executive returned, he showed pictures from the shoot
to some colleagues in prime brokerage, including some of the top
executives in the unit, current and former employees said.
Mr. Malik, a former lawyer at white-collar firm Weil, Gotshal
& Manges LLP, was hired in 2012 to help generate business for
the unit from up-and-coming hedge funds. Bank of America within
about two years began receiving complaints about him, current and
former employees said.
In one instance, a female prime-brokerage employee notified
human resources that Mr. Malik had attempted to start a romantic
relationship with her, which she rebuffed, people familiar with the
matter said. In the complaint, she said she believed that
interaction negatively affected her career, the people said.
She subsequently left the bank, people familiar with the matter
said. It isn't clear whether Bank of America acted on her
complaint. The bank declined to comment on the matter.
Mr. Kasowitz, Mr. Malik's lawyer, said, "Mr. Malik wasn't in any
position to affect this employee's career, advancement,
compensation or day to day responsibilities."
Mr. Malik in recent years was promoted several times, most
recently to global head of capital strategy, a position that
involved staff around the world reporting to him.
He continued to pursue a series of relationships with
subordinates through last year, current and former Bank of America
employees said.
The bank's personnel policy states that personal relationships
among employees in which one has influence over another can lead to
"real or perceived conflicts of interest" and "should be avoided
when possible."
At the end of 2017, one of Mr. Malik's subordinates filed a
complaint with human resources about an unwanted advance, the
Journal earlier reported. On Jan. 9, Mr. Malik was fired by the
bank, according to the Finra record.
Write to Rob Copeland at rob.copeland@wsj.com and Rachel Louise
Ensign at rachel.ensign@wsj.com
(END) Dow Jones Newswires
March 01, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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