For at least the second time this year, the CEO of a white-hot Silicon Valley startup is stepping down amid controversy.
Earlier this year, Uber CEO Travis Kalanick stepped down as the company fought back against months of bad publicity and complaints about the company’s culture.
And late Monday, San Francisco-based Social Finance, better known as SoFi, announced that its CEO and co-founder, Mike Cagney, plans to step down by the end of the year.
The announcement of Cagney’s departure comes as SoFi is dealing with claims that the company fired a former employee for reporting sexual harassment allegations to his superiors.
The former employee, Brandon Charles, formerly a senior operations manager at SoFi, said in a lawsuit that he witnessed his female colleagues being harassed by managers.
Cagney later responded to those claims, saying in an email to all of SoFi’s employees that the company does not tolerate this type of behavior and is conducting an investigation into the allegations.
“To be blunt, that kind of behavior has no place at SoFi, and we’re not going to tolerate it,” Cagney said in his email. “These allegations are being thoroughly investigated by outside attorneys we have engaged. To the extent we determine that there is any truth to the allegations, swift and severe action will be taken.”
Cagney sent that email one week ago, and now he is stepping down.
But an announcement posted by the company about Cagney’s departure makes no mention of the claims against the company. In a statement, Cagney states that “now the right time” for the company to look for a new leader.
“I believe now is the right time for SoFi to start the search for a new leader,” Cagney said in a statement. “I could not be more proud of the company we’ve built together, and I look forward to passing the baton to a new CEO who can continue SoFi’s mission of revolutionizing personal finance, helping our members to get ahead and find financial success.”
According to the company, Cagney plans to plans to step down as CEO before the end of 2017. The company adds that it already began searching for Cagney’s replacement as CEO, and said that Cagney will remain in the role until the board names a successor.
In addition to stepping down as the company’s CEO later this year, Cagney has already stepped down as the chairman of SoFi’s board, the company said.
According to the company, Tom Hutton has been elected to serve as SoFi’s executive chairman, effective immediately.
Hutton joined SoFi’s board in June 2012. He was initial investor in the company, and serves as managing director of XL Innovate, a venture capital firm focused on insurance and financial technology.
“With Mike at the helm, SoFi has become a major, innovative player in consumer finance. We are grateful for all he’s done to help build this remarkable company,” Hutton said. “We’re confident that we can find and hire a great CEO to continue that innovation and drive excellent financial performance.”
According to the company, Steven Freiberg, SoFi’s acting CFO and a member of the board, will take on an “expanded” role as vice chairman.
Freiberg previously served as CEO of E*Trade and co-chairman and CEO of Citigroup’s Global Consumer Group.
Cagney’s departure marks a significant stumbling block for SoFi.
Over the last few years, SoFi grew from a student loan company into one of the largest online residential mortgage retailers. Just under three years ago, SoFi broke into the mortgage business.
Last year, SoFi made waves when it announced a partnership with Fannie Mae, which included a new loan option that allows homeowners to refinance their mortgage at a lower rate and pay down the balance of an existing student loan.
Recently, SoFi announced its intentions to break into banking and applied for a bank charter under the name SoFi Bank in Utah.
While some may not have liked SoFi’s plans, investors showed significant interest in the company.
Earlier this year, SoFi raised $500 million in Series F financing led by Silver Lake. That capital raise came roughly 18 months after SoFi raised $1 billion in its Series E funding, which was led by SoftBank. At the time, the capital raise was the largest single financing round in the fintech space to date.
Including those two funding rounds, SoFi has raised $1.9 billion in equity funding so far.
Just last month, it was reported that SoFi may also be considering raising money in another way – going public.
At the time, Cagney said that the company was searching for a new chief financial officer who could take the company public at some point in the “not-so-distant future.”
But now, Cagney is on his way out of the company he helped found, and the company’s acting CFO is set to take on an “expanded” role.
How quickly things can change.