The potential for harassment, discrimination, and abuse of power is going to be part of workplaces as long as humans with emotions, egos and lack of judgment are a part of them.

Until the robots take over – and we’re already worried they will adopt our biases and negative proclivities – businesses must start with the assumption that the potential for such misconduct is there. So it is up to them to develop policies and procedures to inform their workforce of their expectations, resolve issues that arise, and deal with the consequences, such as stemming reputational damage and fixing corporate cultural weaknesses.

Surveillance capabilities also need to be revisited to see if earlier detection and reporting could have helped.

Lessons from enforcement actions, news stories and regulatory guidance are there for the taking, and there has been no shortage of recent cases to examine.

Misconduct probe at Bank of Montreal

News outlets reported that six people have left Bank of Montreal (BMO) after an investigation into “completely unacceptable” behavior in its investment banking group.

The Toronto-based bank launched a probe after a young, male banker raised concerns about harassment and bullying, Canada’s Globe and Mail first reported. According to the report, a bank employee in the mining and metals group was subjected to homophobic slurs in person and online. 

“Breaches of this standard are not tolerated and are subject to disciplinary actions up to and including termination of employment.”

BMO spokesperson Kelly Hechler

“An employee escalated a complaint that alleged completely unacceptable behavior. We take matters of misconduct very seriously. An investigation was launched immediately. Six individuals are no longer with the bank,” BMO spokesperson Kelly Hechler said in an email.

Four of the six were fired and two resigned, the Globe said, citing a person familiar with the matter. The report also said five of the six employees were junior bankers in the mining group and the other was a director who supervised them.

BMO’s statement

“All employees attest to and are expected to meet our standard of respect, inclusivity and professionalism,” Hechler said. “Breaches of this standard are not tolerated and are subject to disciplinary actions up to and including termination of employment.”

In a memo circulated to staff last week, BMO Capital Markets chief executive Alan Tannenbaum said the bank should be an inclusive environment where all employees feel safe, and that inappropriate behavior won’t be tolerated, according to a person familiar with the matter.

The consequences are serious and staff should speak up when something seems wrong, Tannenbaum added in the note.

FDIC lawyer pleads guilty to child sexual exploitation

A senior attorney with the Federal Deposit Insurance Corporation (FDIC) has pleaded guilty to one charge of sexually exploiting children, the US Department of Justice (DOJ) announced.

Mark Black had most recently worked as special counsel in the office of the FDIC’s general counsel, according to his LinkedIn profile. He had been with the FDIC since 2013.

DOJ allegations

According to federal prosecutors, between January 2018 and October 2021, Black was a member of two online groups dedicated to finding prepubescent girls and convincing them to livestream themselves engaging in sexually explicit content, the DOJ said.

Black had remained on paid administrative leave for 10 weeks after he was indicted on federal charges related to the production, possession and distribution of child pornography, an agency official said.

Following his indictment in September, the agency sought to remove Black, but at first struggled to reach him to serve him with a legally required notice. When Black was notified, he contested the effort, the FDIC official said. The agency opted to move forward with unpaid indefinite suspension instead to avoid any further delays if the removal effort had to be adjudicated.

The FDIC doesn’t need the bad press; his guilty plea comes while the agency is under scrutiny over unrelated allegations of a toxic work environment.

On November 8, the FDIC gave Black notice of a proposed indefinite suspension without pay, and the unpaid suspension went into effect on November 27.

Could FDIC have moved more swiftly?

The WSJ spoke to federal employment experts who said that while there are bureaucratic hurdles to suspending and terminating federal employees, there are legal and regulatory provisions that allow agencies to act more swiftly if they believe an employee may face prison time.

The so-called “crime provision” provides an exception to the rule that employees are entitled to 30 days’ notice if the agency has reasonable cause to believe an agency employee has committed a crime that may warrant imprisonment. Under that provision, agencies can seek to remove an employee or place them on indefinite suspension within seven days, and they are not required to wait for an indictment to invoke the provision.

On Tuesday, Black pleaded guilty to one count of conspiracy to produce child pornography and one count of coercion and enticement, and he will be sentenced April 30. He faces at least 15 years in prison.

Toxic work environment claims

The FDIC doesn’t need the bad press; his guilty plea comes while the agency is under scrutiny over unrelated allegations of a toxic work environment – allegations revealed in a WSJ investigative report published in November. The investigation featured the statements of numerous female and some male examiners revealing the nature of a sexualized, frat-house culture at the banking regulator that had driven numbers of FDIC bank examiners to quit. Most of them were women.

After the revelations came to light, FDIC Chairman Martin Gruenberg faced scrutiny from US lawmakers to address what he admitted were serious allegations. The agency has since hired an external law firm to review its workplace culture; its inspector general is conducting its own review.

UK’s FCA surveys for harassment, bullying

The UK’s financial services regulator, the FCA, is looking at how investment banks and commercial insurers deal with sexual harassment, bullying and other non-financial misconduct amid complaints from alleged victims that they are often silenced or forced to quit.

The survey, which will shed light on how employers decide staff are fit and proper to work in finance, was announced as lawmakers held the final session of a “Sexism in the City” inquiry.

Sarah Pritchard, an executive director at the FCA, told British lawmakers on January 17, 2024, that it would survey the wholesale banking and insurance market to examine the prevalence of such misconduct and how it was detected and resolved.

“We can use what it tells us to take stock, to share best practice … but also, crucially, to inform our supervisory program when the new rule sets come into place,” she told Parliament’s cross-party Treasury Committee.

Sexism in the City inquiry and Crispin Odey

The survey, which will be completed by mid-year and shed light on how employers decide staff are fit and proper to work in finance, was announced as lawmakers held the final session of a “Sexism in the City” inquiry into tackling sexual harassment and an “old boys’ club” culture in the industry.

The evidence session also comes against the backdrop of sexual assault and misconduct allegations that have been leveled against hedge fund founder Crispin Odey and officials at The Confederation of British Industry.

The allegations threw Odey’s hedge fund and the trade body into crisis, and the hedge fund has since been wound down. Odey denies all of the allegations against him.