As sexual harassment allegations against hedge fund titan Sam Isaly echo around Wall Street, one of his firm’s multibillion-dollar clients is reviewing its relationship with the fund, and Isaly has been removed from the agenda of an upcoming investor conference.
Isaly, the 72-year-old founder and managing partner of OrbiMed Advisors, for years sexually harassed and demeaned female employees, six former OrbiMed employees have told STAT. Isaly has denied the allegations.
Eaton Vance, an investment firm with more than $400 billion in assets, said it was studying the allegations, which were first made public in a story published by STAT on Tuesday evening. The firm pays OrbiMed for investment advice.
“We were not aware of any of these allegations, which we take very seriously,” an Eaton Vance spokesperson said in an email to STAT. “We are reviewing the matter now.”
In a filing with the Securities and Exchange Commission, Eaton Vance said OrbiMed had adopted a code of ethics mandating that “all personnel must conduct themselves in a professional and ethical manner that will reflect favorably on OrbiMed and the profession, and should encourage others to do the same.”
CalPERS, the multi-billion dollar California public pension fund, also invests in OrbiMed, through a “fund of funds,” managed by an external investment professional.
“While we have no control over external manager investment decisions or underlying portfolio holdings, we will certainly bring this matter to the attention of our external manager,” a CalPERS spokeswoman said an email to STAT.
The pension fund has a list of core values it looks for before investing in a company, including “fair labor practices, health and safety, responsible contracting, and diversity.”
Three other OrbiMed investors, including Ohio’s large public pension fund, did not respond to questions about the allegations against Isaly.
Cambridge Associates, a worldwide firm that advises pension funds on how to invest, declined to comment on whether it would continue to recommend OrbiMed to its clients. “As a policy, Cambridge Associates does not discuss specific managers or identify ones it does or does not invest with,” a spokesperson said via email.
“If Isaly is guilty, it’s staggering that no one near him had the inclination or access to update him on contemporary social norms.”
Thornton McEnery, Dealbreaker
STAT’s initial story was based on the accounts of five former employees. A sixth reached out Wednesday and corroborated the others’ descriptions of Isaly’s pervasive sexual harassment and demeaning remarks toward female employees. She asked to remain anonymous for fear of reprisals from OrbiMed.
The former employees who spoke to STAT said they had complained about Isaly’s behavior to other partners and, in some cases, to the firm’s human resources manager, Kirsten Kearns. Kearns initially told STAT she had received no complaints, then acknowledged that OrbiMed had done an internal investigation of Isaly’s actions and concluded none rose to the level of “a sexually egregious behavior.”
After the STAT story was published, OrbiMed put out a statement saying it had hired an independent law firm to investigate the allegations. The company did not respond to questions on Wednesday about which firm will do the investigation, how long it is expected to take, or whether the results will be made public.
In the meantime, the allegations against Isaly, which include claims that he exposed female subordinates to pornography at work and brought a sex toy into the office, spread quickly through the world of finance. Bloomberg News picked up the story Tuesday night, and financial outlets in the U.K., where Isaly manages a closely watched health care fund, followed suit the following morning.
Dealbreaker, a widely read blog devoted to finance, wrote Wednesday that “if Isaly is guilty, it’s staggering that no one near him had the inclination or access to update him on contemporary social norms.”
Worldwide Healthcare Trust, a $1.2 billion U.K. fund managed by Isaly, issued a statement Wednesday acknowledging the allegations against him and promising to “keep shareholders informed of any relevant developments.” A spokesperson for the fund declined to expand upon the statement.
Isaly, who frequently comments on biotech stocks in print and on television, is no longer listed among the speakers at an upcoming CNBC heath care conference. Before STAT’s story, he had been highlighted as one of six high-profile guests scheduled to speak at the March event, where he was billed as “one of the world’s most recognized health care fund managers.”
A CNBC spokesperson declined to comment on his removal from the schedule.
On Tuesday night, Isaly didn’t show up for an investor event to which he was invited, according to one attendee. The event, hosted by biotech investment bank Evercore ISI at a luxurious Manhattan co-op, was a dinner uniting the firm’s analysts and 10 high-profile investors. Isaly was expected but never turned up, the attendee said.
This story has been updated with comments from CalPERS.