They Gave Her a $3.8 Million Bonus—and Then the Boot

Few women reach the top of the richly paid, secretive world of hedge funds.

Christine Rohrbeck, a rising star at hedge fund Baupost Group, remembered the advice from her yearend performance review: “Lean in.” A male senior partner was echoing Facebook Inc.’s Sheryl Sandberg, who advises women to strive for top jobs and resist assuming that family commitments must derail their careers. Still in her 30s, Rohrbeck would earn a $3.75 million bonus for that year, 2014. She heard it was the most of anyone in a similar role at Baupost, one of the largest and most successful hedge funds. Yet the next year, after almost a decade at the Boston fund, the Harvard MBA was out of a job. Rohrbeck blamed gender discrimination and an illness. Baupost at the time employed only two women out of 50 investment professionals, according to her previously undisclosed state discrimination complaint.

Citing a confidentiality agreement, Baupost declined to discuss the case. Spokeswoman Diana DeSocio says of Rohrbeck: “We wish her well, but the allegations have no merit.” Seth Klarman, Baupost’s chief executive officer, who was not personally accused of discrimination, says the fund had been working hard to recruit and promote women but suffered from an industrywide shortage of female applicants for investment positions. “We do everything we can to place women in leadership roles,” Klarman says. “We’re not where we want to be, and the industry isn’t where it should be, but it’s not for lack of trying at Baupost.”

Klarman at the Allen & Co. Media and Technology conference in Sun Valley, Idaho, on July 12.
Photographer: David Paul Morris/Bloomberg

The Baupost grievance, filed with the Massachusetts Commission Against Discrimination in 2016, opens a window into the experience of the relative handful of women who manage money at often secretive hedge funds. These investment vehicles, which oversee more than $3 trillion, rank among the most lucrative redoubts on Wall Street because managers typically keep a 20 percent cut of profits. The year of Rohrbeck’s big bonus, Klarman was paid $200 million, according to Forbes.

In her complaint, which was settled this year on undisclosed terms, Rohrbeck questioned Baupost’s record of retaining women, especially after childbirth. She said her boss made a crude joke to her about a colleague’s masturbation and that she heard secondhand that he liked to rate women by appearance. Her case, however, involved more than allegations of sexist behavior. She said she lost her job after asking for accommodations because she had been diagnosed with celiac disease.

At the anti-discrimination agency, Rohrbeck was the only woman over the past decade to allege gender discrimination at Massachusetts’ largest hedge funds, records show. Employment lawyers say the funds tend to settle such disputes privately and require women to keep settlements secret. Rohrbeck and her attorney declined to comment.

In Boston, at least two of Baupost’s neighbors are confronting complaints about their treatment of women. Fidelity Investments recently fired two prominent money managers over sexual harassment claims. In a lawsuit, still pending, a Fidelity real estate analyst claimed she was fired for complaining about conditions for women and then blackballed from the industry. The company denies the allegations. Rohrbeck said Baupost also made it hard for her to find another job. In October, financial-services company State Street Corp. agreed to pay $5 million to settle federal allegations that it paid 300 female executives less than their male colleagues. State Street disputed the findings.

Women hold only 11 percent of senior roles at hedge funds, 21 percent of midlevel positions, and 26 percent of junior ones, according to money-management data firm Preqin Ltd. They are underrepresented in investment jobs at hedge funds but overrepresented in support roles, such as marketing, according to Dariely Rodriguez, Economic Justice Project director at the Lawyers’ Committee for Civil Rights Under Law. While almost half of Baupost employees are female, only 8 percent of its investment professionals are women, and none of them are in senior roles. When it comes to recruiting, retaining, and promoting women, Rodriguez says, “the finance industry, including hedge funds and investment firms, has a lot of work to do.” At alternative asset managers in North America, such as hedge funds and venture capital firms, 81 percent of women said they find it more difficult for them to succeed than for men, according to a 2016 KPMG survey. Forty-four percent said they were stereotyped as more committed to their personal lives than to work.

At Baupost, 2 of 11 partners are women, and they hold leading roles: Chief Financial Officer Barbara O’Connor and Chief Operating Officer Elaine Mann, who oversees areas such as finance, technology, human resources, and investor relations. Mann, who has worked for 20 years at Baupost and was promoted to COO in 2014, says she supervises 176 of Baupost’s 250 employees. Among her reports, more than half the department heads are women. She says the company offers 17 weeks of paid maternity leave and has ended valuable relationships with outside business partners when female employees felt they were being mistreated. Since only 5 percent of investing applicants are women, Klarman says, Baupost is sponsoring conferences and an internship aimed at recruiting women. “We are proud of our record,” he says. “I want Elaine’s story to be every woman’s story.”

Rohrbeck, who has a bachelor’s degree from Harvard as well as the MBA, joined Baupost in 2006 as an analyst. She specialized in real estate investing. After five years, she was promoted to principal, one rung below managing director, which is then followed by partner. She consistently won bonuses based on her results, she said in her state filing.

In 2014, Rohrbeck was diagnosed with celiac disease, which causes severe stomach pain and other distress. She asked her boss, George Rizk, another Baupost partner, if she could limit travel for a few months. He agreed. That fall, in her review, partner Thomas Blumenthal made his suggestion: “I should lean in,” she says he instructed her. After her review, Rohrbeck read Sandberg’s book, Lean In. “I became increasingly concerned that Mr. Blumenthal’s remark possibly reflected a misconception at Baupost that my gender might interfere with my ability to perform my job,” she said in her complaint. Baupost said Blumenthal had no comment. After Thanksgiving, she confronted Blumenthal, noting a trend of women on the investment team leaving shortly after having their first child. At Blumenthal’s suggestion, she met with COO Mann.

In January 2015, when Baupost paid out Rohrbeck’s $3.75 million bonus, Klarman congratulated her on a “strong year,” according to her filing. But she continued to struggle with her illness. At a business meeting in Panama, she had to excuse herself because she felt sick and took a cab to the hotel to rest. She told her boss what happened, and he asked her to talk again with him and Mann—a step Rohrbeck thought was unnecessary. He insisted. “You were a woman alone sick in a taxi,” she recalled Rizk saying.

In May, criticizing her performance, Rizk put her on a “development plan,” she said. As her boss’s scrutiny intensified, Rohrbeck said male colleagues told her Rizk was more comfortable with men in the group because he enjoyed sexist banter. Rizk, she was told, would initiate a game of “Hot? Not? Or past her prime?” to judge women in the real estate industry, according to her complaint. Rohrbeck said she too had seen this side of Rizk at a company dinner in early 2015. He brought up a male co-worker who had been fired for masturbating at his desk, then asked Rohrbeck if she had been the object of his affection, according to her account to the state. Baupost said Rizk declined to comment.

In October 2015, Rohrbeck said, Baupost told her that she’d be terminated. Rizk, she was informed, had concluded her “performance did not meet the standards of a tenured principal.” Even then, she left with a bonus. In her view, it was evidence of her mistreatment because it was such a comedown from the year before. It showed how lucrative the hedge fund world could be. The sum: $1 million.

    BOTTOM LINE - A former money manager at Baupost, one of the world’s most successful hedge funds, alleges gender discrimination at the firm.
    Before it's here, it's on the Bloomberg Terminal.