BlackRock Executive Ousted for Failing to Disclose Personal Relationship -- 3rd Update
06 December 2019 - 11:15AM
Dow Jones News
By Dawn Lim
A contender for the top job at BlackRock Inc. was ousted from
the money-management giant for failing to disclose a relationship
with an employee who reported to him, the latest high-profile
instance of executive misconduct at a major U.S. company.
Mark Wiseman rose from Canada's public-pension world to become a
protégé to BlackRock chief Laurence Fink. The firm on Thursday said
in an internal memo that he was departing the company for violating
policies.
Mr. Wiseman is the second high-ranking BlackRock executive to
leave the firm in recent months due to breach of company
policy.
The abrupt dismissal comes as American corporations continue to
grapple with the issue of workplace relationships and concerns over
harassment.
McDonald's Corp. last month said it fired Chief Executive Steve
Easterbrook because of a consensual relationship with an employee.
Last year, Intel Corp. said Chief Executive Brian Krzanich resigned
for violating company policy by having a relationship with a
co-worker.
"Our culture has always been one of BlackRock's greatest
strengths, and it is deeply disappointing that two senior
executives have departed the firm in the same year because of their
personal conduct," Mr. Fink and President Rob Kapito said in an
internal memo Thursday. "This is not who BlackRock is."
They added the firm moves quickly to address breaches of policy
or conduct that it doesn't see as aligned with its values.
BlackRock exploded into a nearly $7 trillion behemoth over the
last decade as the revolution it helped steer in exchange-traded
funds and index funds reshaped the investment world. The firm can
cast votes that determine everything from who sits on a company
board to how executives deal with corporate governance. How it
policies its own workplace culture affects its credibility and
clout over other companies.
Mr. Wiseman didn't respond to a request for comment. In a
separate internal BlackRock memo Thursday, the 49-year-old
executive was quoted as saying, "I engaged in a consensual
relationship with one of our colleagues without reporting it. I
regret my mistake and I accept responsibility for my actions."
Mr. Wiseman is married to Marcia Moffat, a BlackRock executive
who heads the firm's Canada business. The two were seen as a power
couple at the world's largest asset manager. The relationship that
Mr. Wiseman failed to disclose was with a different woman who
reported to him, according to people familiar with the matter.
BlackRock requires employees to disclose romantic relationships
with direct subordinates or other colleagues. A person familiar
with the matter said this allows it to decide if staffers need to
change jobs if a relationship could cause favoritism, conflicts of
interest or other issues.
Earlier this year, Jeff Smith was asked to leave his position as
global head of human resources for failing to adhere to company
policy, according to an internal memo reviewed by The Wall Street
Journal.
His firing marked a sudden exit for a BlackRock veteran. Mr.
Smith had ascended in the firm as human resources became
increasingly important for a company that had undergone explosive
growth. Mr. Smith couldn't be reached for comment Thursday.
Mr. Wiseman joined BlackRock in 2016 from Canada's pension
investor, the Canada Pension Plan Investment Board. He was among
half a dozen candidates vying to succeed Mr. Fink.
Although BlackRock is best known for funds that mirror markets
and trade rapidly, Mr. Wiseman became the face of a push to expand
beyond indexed products and exchange-traded funds. He headed
BlackRock's approximately $300 billion active equities business and
directed strategy for another roughly $170 billion business focused
on private equity and other alternative investments.
One of the tests Mr. Wiseman faced at the firm was raising a
megafund modeled after Warren Buffett's Berkshire Hathaway. That
bid to turn BlackRock, king of the low-fee exchange-traded fund,
into a private-equity titan went slower than expected. A plan
created in 2018 to raise at least $12 billion for that fund fell
behind schedule.
Mr. Wiseman confided to associates over the past year that he
was frustrated by the difficult fundraising, according to people
familiar with the matter. BlackRock pledged $500 million from its
own balance sheet to close the first round at $2.75 billion in
2019.
Mr. Wiseman's departure triggers an automatic suspension of all
new deals from that fund. The firm will have to get permission from
a handful of key investors to continue investing. BlackRock said
Mr. Kapito, the firm's president, would become chairman for that
fund, and investment decision-making remains unchanged as the firm
remains committed to the strategy.
The active-equity business that Mr. Wiseman was tasked to revamp
continues to face intense competition from index funds. His 2017
overhaul of the business involved layoffs, pricing changes and
making algorithms a bigger part of the investment process. Since
then, active equities has grown in size but continues to lose
ground to other strategies BlackRock runs.
With the departure, BlackRock's alternatives business will
continue to be led by Edwin Conway, who heads day-to-day
operations, and Jim Barry, who leads investments. The leaders of
the various active equity strategies will report to Mr. Kapito
while BlackRock assesses how to structure leadership over that
business.
Write to Dawn Lim at dawn.lim@wsj.com
(END) Dow Jones Newswires
December 05, 2019 19:00 ET (00:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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