A Sex Scandal at Goldman Sachs Has Morphed into a Lawyer Scandal

By Pam Martens and Russ Martens: November 19, 2020 ~

Protester Wears a Swamp Creature Costume Outside Goldman Sachs Headquarters, January 17, 2017

Protester Wears a Swamp Creature Costume Outside Goldman Sachs Headquarters, January 17, 2017

It’s starting to feel like Goldman Sachs has an insatiable appetite for scandal. Thanks to Matt Taibbi, Goldman is already known around the world as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Most recently, Goldman jammed its blood funnel into the 1MDB sovereign wealth fund of Malaysia, resulting in a criminal indictment by the Malaysian government followed by a settlement with Malaysia for $3.9 billion. In October criminal charges were brought in the same matter by the U.S. Department of Justice against Goldman, resulting in another $2.9 billion in fines by U.S. and foreign regulators.

The heavily publicized 1MDB scandal has filled headlines for the past five years. The Justice Department just settled its 1MDB charges against Goldman four weeks ago. Now Goldman is already back in the tabloid headlines for handling a sexual harassment case so shoddily that it seems like the multi-national bank has some kind of psychological need to perpetually sabotage its reputation.

The roots of the latest scandal began in December 2017 when it was announced that a partner of the big Wall Street law firm, Sullivan & Cromwell, Karen Seymour, would be moving to Goldman Sachs to become co-general counsel and partner. Seymour is currently the General Counsel at Goldman. Seymour recommended a former colleague at Sullivan & Cromwell, Darrell Cafasso, to become the Global Head of Litigation at Goldman and he was hired for the job.

Now Goldman, Seymour and Cafasso are being sued by Marla Crawford, a lawyer who worked for the law firm, Jones Day, for 22 years and as a lawyer for Goldman for the past decade. Crawford held the position of Associate General Counsel at Goldman prior to her termination. Crawford’s lawsuit indicates that she had received “exemplary” performance reviews and was terminated for speaking up against the sexual harassment conduct of Cafasso toward one of Crawford’s younger colleagues. According to the lawsuit, this is what went down:

“Mr. Cafasso, as Global Head of Litigation, is in a position of substantial power, and he used that position to romantically prey upon a much younger and vulnerable female colleague (referred to anonymously herein as ‘Jane Doe’) who worked in his group and reported to him. Mr. Cafasso knew this Jane Doe would be susceptible to his advances and targeted her for that reason – Jane Doe knew her performance needed improvement, she was dealing with difficult personal matters outside of work, and Mr. Cafasso would exacerbate these matters through encouraging her to drink alcohol during private offsite meetings….”

The affair ended as follows, according to the lawsuit:

“Accordingly, on Friday, November 1, 2019, Mr. Cafasso self-reported to Ms. Seymour that he had developed an intimate relationship with Jane Doe, that he had told his wife and that he was going to end it. Later that day, without any warning, Mr. Cafasso called Jane Doe while she was at the office and told her that his wife was with him on speakerphone. Mr. Cafasso and his wife told Jane Doe that the relationship was over.”

Putting aside that the Global Head of Litigation for the vampire squid needs his wife on the phone for courage to tell his mistress that the affair is over, there is the question of why Goldman’s General Counsel, Karen Seymour, did not immediately suspend or fire Cafasso, since he had allegedly self-confessed to having an affair with a young subordinate.

Having an affair with a subordinate that reports to you, where the boss can extort sexual favors for favorable performance reviews (which Crawford’s lawsuit says Cafasso did with Jane Doe) is grounds for immediate dismissal in most ethical workplaces. McDonald’s fired its CEO, Steve Easterbrook, last year over the same issue.

The lawsuit indicates that an outside law firm was hired to investigate the matter. (What’s to investigate if Cafasso self-confessed to Seymour?) Crawford indicates in the lawsuit that the investigation “was completely tainted from the start and was expressly set up to clear Mr. Cafasso of wrongdoing. One of Ms. Crawford’s colleagues told her that directly. Upon information and belief, Goldman apparently went so far as to contact a nearby hotel that Mr. Cafasso and Jane Doe had gone to together to buy security footage to ensure it did not get in the wrong hands.”

Crawford also indicates that neither she, nor numerous other employees who had material information for the investigators, were ever questioned by the “independent” investigators.

Cafasso was put on leave but, according to the lawsuit, Seymour told a colleague that the goal was to “try to put this genie back in the bottle.” The upshot was “Mr. Cafasso was quickly back to work within two weeks, potentially putting other junior women in a vulnerable position,” according to Crawford’s lawsuit.

Jane Doe returned to work only briefly after the phone call with the wife and, according to Crawford’s lawsuit, is believed to have taken a settlement and signed an NDA (non-disclosure agreement).

This should become a textbook case at Harvard Law on how not to handle a sexual harassment lawsuit. You can read the full text of Crawford’s lawsuit here.

Now the tabloids have taken over. The Daily Mail in London has printed the lurid details as has the New York Post in New York. The scandal has now sucked in women’s rights lawyer, Roberta Kaplan, who has bizarrely agreed to represent the vampire squid in the matter. Vivia Chen at The American Lawyer correctly notes that Kaplan has “gone to the dark side.”

Crawford has ratcheted up the heat on Goldman by publishing an open letter at Medium, titled “Women Are Being Silenced at Goldman Sachs.” In the open letter, Crawford writes that there is “systemic anti-woman, anti-employee rights practice being employed at Goldman Sachs” and she urges the bank to relieve her “and all other employees from confidential arbitration and non-disclosure agreements (‘NDAs’), which only protect wrongdoers and the Bank.”

Mandatory arbitration on Wall Street, which forces all employee lawsuits into a rigged private justice system run by Wall Street’s self-regulator, FINRA, instead of allowing the cases to proceed through a transparent court system, is why Wall Street remains a cross between a good ole boys club and the last plantation in America.

Crawford notes in her open letter that one big Wall Street bank, Wells Fargo, has broken ranks with the rest of the pack and does not force workers into mandatory arbitration agreements for sexual harassment claims. We contacted the bank to confirm this, which they did. On February 12 of this year, Wells Fargo issued a press release stating the following:

“Wells Fargo & Company (NYSE: WFC) today announced that, effective immediately, the company will no longer require arbitration for employees in connection with any future sexual harassment claims…We believe that this is the appropriate change to make at this time for our employees. The treatment of sexual harassment claims has become an increasingly prominent issue across industries. We’ve taken many steps to create and maintain a workplace environment that promotes and protects the safety and well-being of our employees.”

Crawford also highlights the conflicted role that Roberta Kaplan is playing in the case, writing as follows:

“Goldman should not hide behind a purported women’s rights activist to create an impression that it supports women. It is Goldman’s actions that matter, not who the Bank is able to pay to push its agenda. In helping Goldman attempt to move my case into arbitration, Ms. Kaplan is advocating for a position that is the antithesis of her statement that ‘[t]he #MeToo and Time’s Up movements constitute a revolution in women’s rights that is too powerful to be turned back.’ Goldman’s position that my claims must be arbitrated in secrecy sends a terrible, anti-#MeToo message to other women at Goldman that the Bank does not value transparency and does not believe those who raise claims are entitled to a fair process of adjudication. This position will set Ms. Kaplan’s work — and the good work of many others at Time’s Up and otherwise — backward rather than forward.”

Crawford also reveals in her open letter that Goldman has tweaked its mandatory arbitration contract with employees, adding an extra evil twist. Crawford writes:

“Goldman’s arbitration agreement requires complete confidentiality of proceedings — meaning the Bank and individual wrongdoers will be permitted to have their misconduct completely hidden behind closed doors, never to be seen by the public, let alone shareholders. Confidential arbitration only further contributes to the proliferation of harassment in the workplace. In confidential arbitration, women do not know that others are being subjected to the same conduct and it stops the public from seeing patterns of misconduct by individuals or institutions.”

Wall Street On Parade has written extensively about the corrupt nature of mandatory arbitration contracts on Wall Street. (See Related Articles below.)

Editor’s Note: Pam Martens, Editor of Wall Street On Parade, was the lead plaintiff in Martens v. Smith Barney, a five-year federal class action lawsuit filed on May 20, 1996 that set out to end mandatory arbitration of civil rights claims on Wall Street, including claims of sexual assault and sexual harassment. You can read how that played out here.

Related Articles:

Wall Street’s Protection Racket: Mandatory Arbitration

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