Considering Wall Street’s reputation as a bastion of sexism and conservative values, the big banks and their peers on the buy side have largely avoided the embarrassing sexual misconduct scandals that have plagued other industries (like Hollywood, where seemingly every man – serial rapists and controlling boyfriends alike – who has ever mistreated a woman has received their comeuppance).
One reason for the disquieting silence could be that women on Wall Street are too afraid to speak up, fearing that they would be blackballed from an otherwise lucrative and successful career. Another is that banks – given that practicing risk mitigation is their primary craft and trade (though not always successfully) – and big buy side firms have such an aversion to negative publicity that they quietly take care of problem employees before word gets out. Or they ensure that it never does.
Well, on Monday, reporters at Bloomberg News posited another explanation: That Wall Street executives have become so terrified of being falsely accused of sexual misconduct – or of having their words and intentions “misinterpreted” – that they’re afraid to walk within 12 paces of a junior female employee without a phalanx of HR reps present to oversee the encounter.
Bloomberg even came up with a catchy name for the phenomenon: “The Pence Effect” – a reference to Mike Pence’s policy of never dining alone with a woman who isn’t his wife. Ironically, the “Pence Effect” has become so widespread that it’s starting to hurt the chances of young women hoping to break into the industry.
Across Wall Street, men are adopting controversial strategies for the #MeToo era and, in the process, making life even harder for women by creating an atmosphere of de facto gender segregation.
Interviews with more than 30 senior executives suggest many are spooked by #MeToo and struggling to cope. “It’s creating a sense of walking on eggshells,” said David Bahnsen, a former managing director at Morgan Stanley who’s now an independent adviser overseeing more than $1.5 billion.
This is hardly a single-industry phenomenon, as men across the country check their behavior at work, to protect themselves in the face of what they consider unreasonable political correctness – or to simply do the right thing. The upshot is forceful on Wall Street, where women are scarce in the upper ranks. The industry has also long nurtured a culture that keeps harassment complaints out of the courts and public eye, and has so far avoided a mega-scandal like the one that has engulfed Harvey Weinstein.
Put another way, the #MeToo movement is doing more to reinforce the “boys club” atmosphere on Wall Street than break it down.
One female banker who spoke with Bloomberg said that women in the industry are struggling to find ways to deal with this problem because “it’s hurting our careers.” And while it might save some Wall Streeters from an embarrassing, or potentially career changing, sexual harassment lawsuit, it could expose them to a legal action of a different kind: Gender discrimination.
“Women are grasping for ideas on how to deal with it, because it is affecting our careers,” said Karen Elinski, president of the Financial Women’s Association and a senior vice president at Wells Fargo & Co. “It’s a real loss.”
There’s a danger, too, for companies that fail to squash the isolating backlash and don’t take steps to have top managers be open about the issue and make it safe for everyone to discuss it, said Stephen Zweig, an employment attorney with FordHarrison.
“If men avoid working or traveling with women alone, or stop mentoring women for fear of being accused of sexual harassment,” he said, “those men are going to back out of a sexual harassment complaint and right into a sex discrimination complaint.”
While it might not seem like such a big deal to outsiders, being excluded from after work drinks (or strip club trips) with the boss can deprive female employees of valuable opportunities for mentorship. But while some men are loathe to have a one-on-one meeting with a junior female employee behind a closed door, others have pointed out that, in reality, avoiding the line between sexual harassment and normal every day interactions between a superior and their junior isn’t all that hard.
There are as many or more men who are responding in quite different ways. One, an investment adviser who manages about 100 employees, said he briefly reconsidered having one-on-one meetings with junior women. He thought about leaving his office door open, or inviting a third person into the room.
Finally, he landed on the solution: “Just try not to be an asshole.”
That’s pretty much the bottom line, said Ron Biscardi, chief executive officer of Context Capital Partners. “It’s really not that hard.”
But in the age of #believeallwomen, why even risk it?