When Investigation Of Corrupt Corporate Cultures Reveals Other Problems

For a bright shining moment, it looked like WeWork was going to be the Starbucks of office space—a worldwide company offering shared drop-in workspaces that people could rent for short or long-term. But lawsuits relating to sexual harassment filed before WeWork’s Initial Public Offering hurt the burgeoning company’s reputation. More allegations began to follow, including charges of gender discrimination and wasteful spending by leadership. Then there were accusations that the workspaces being rented were unsafe: “Some were found to have unsafe levels of formaldehyde.” Soon the company’s chief executive no longer had an office at WeWork.

Research has shown that sometimes when a company is dealing with issues such as sexual harassment, the perpetrators are also often involved in other wrongdoing. Workplaces that are high in sexual harassment may also be higher in other forms of discrimination or worker mistreatment.

In one dramatic example that arose during a due diligence investigation, investigators found a chairman and CEO of a company had a history of sexual misconduct, and, through further investigation, they discovered that he was also committing fraud and forgery.

The key is that sexual harassment is considered a serious ethical violation—it’s an indication of what leaders will put up with or what they will do themselves. If they are willing to pay large, hidden settlements in sexual harassment, does that happen in other contexts, too? If they believe that they’re above the law in this sphere, do they also believe that is true in others? So sexual harassment can be a red flag for other ethical violations going on at the same firm.

And if the allegations are widely known through the company, it suggests that the company directors are also falling down on the job, because they aren’t acting on these cases. They are failing to properly supervise the company’s leadership and protect the investors’ interests. If that’s the case, then it’s natural to begin asking if the directors are ignoring other problems as well.

Sexual harassment may just be the tip of the iceberg when it comes to a public company’s malfeasance. That’s just one more reason that if you’re thinking of filing a claim, talk to accomplished attorneys about your case. Silver Law Group has many years of experience in these cases representing whistleblowers, FINRA registered employees, and others in a variety of SEC and FINRA matters. We are here to help you assess the situation and decide on the best course of action. For a free, confidential consultation, contact us or call today at (800) 975-4345.