Sarah Tirschwell and TCW: The #MeToo case that has shaken Wall Street

On 14 December 2017, Sara Tirschwell was called into an unscheduled meeting with the general counsel and chief compliance officer of her employer, the giant asset-management firm TCW. Tirschwell, 53, was an experienced investor who had been hired the previous year to raise and run a new distressed debt fund for TCW. Entering the conference room, high above Midtown Manhattan, in New York City, she wasn’t sure what the meeting was about. It didn’t take long for her to find out: she was being fired.

TCW alleged that just days earlier, Tirschwell breached an ethical wall by telling an employee in a different department about a potential deal. It was Tirschwell’s fifth violation in less than 18 months, the company said – more than any other employee had accumulated in such a short time, and cause for termination.

As Tirschwell sat there processing the news, the chief executive of TCW, David Lippman, walked into the room. The company would offer her a severance package of $500,000 (£381,000) if she signed an agreement promising not to sue. “Look at me,” she recalled Lippman saying, according to a court filing. “This is not negotiable.”

Tirschwell left the meeting without accepting the offer. This wasn’t actually about compliance, she believed. It was retaliation. Because there was an entirely different narrative that Tirschwell thought explained why TCW was so eager to get rid of her: just nine days earlier, she had made a formal complaint of sexual harassment.

On 5 December, Tirschwell had written to TCW’s head of human resources to complain that her boss, Jess Ravich, had pressured her into sex several times during her tenure with the firm. When she stopped sleeping with Ravich, she claimed, he stopped supporting her fund, making it impossible for her to succeed at her job. The day after receiving her complaint, the human resources head and general counsel interviewed Tirschwell and promised to investigate. But then came her firing.

In January 2018, Tirschwell sued TCW, Ravich and Lippman for retaliation, gender discrimination and breach of contract, claiming damages in excess of $30m. TCW, the complaint says, “manufactured a potentially career-ending charge by falsely accusing Tirschwell” and tried to “force a quiet exit” by having her drop her claims.

TCW, Lippman and Ravich deny the accusations. “These allegations are completely false,” Ravich said in a statement provided by his lawyer. He added: “As one of the seed investors in the distressed fund, it was in my financial best interest to help the fund succeed. Any claim that I withheld support for the fund is preposterous and completely illogical. I was Sara’s biggest supporter at TCW and had no role in the decision to fire her.”

Though little known beyond the world of finance, TCW is one of the most powerful names on Wall Street, managing some $191bn for clients, including enormous pension funds in California and Texas. With headquarters in Los Angeles, the firm last made big headlines a decade ago, after the firing of a star bond investor, Jeffrey Gundlach, set off a sensational legal battle and revealed a sometimes-raucous company culture. Since then, TCW has operated mostly under the radar – until Tirschwell’s lawsuit.

More than a year into the litigation, the two sides are at loggerheads. Unusually for a Wall Street firm, TCW has refused to settle, alleging that Tirschwell was a difficult and underperforming employee who saw she was in trouble and lodged a sexual harassment complaint before the company had the chance to let her go. Complicating matters, Tirschwell and Ravich had been dating as recently as 2013. When she joined TCW, her ex-boyfriend was suddenly her boss.

The case is slogging its way through the court system. Discovery is continuing, there is zero talk of cutting a deal and unless something dramatic happens, Sara Tirschwell v TCW Group, David Lippman and Jess Ravich could become the first major Wall Street case of the #MeToo era to go to trial.

Days in court have been rare for the movement – and rarer still for Wall Street, where grievances are typically dealt with in private, and by wire transfer, when they are dealt with at all. Tirschwell’s battle with TCW is changing that, offering an uncommon look at how sex, money and power really work in a supposedly rarefied industry. But in a case this charged – with Tirschwell and Ravich directly contradicting each other in court filings – anyone looking for a tidy outcome is bound to be disappointed.

A startling narrative

Tirschwell and Ravich first met around 1994, when she worked for a trading firm called Libra Securities, where he was the chief executive. After she left the company, they lost touch until 2011 or 2012, when they reconnected and dated for about a year.

In 2015, Tirschwell began discussing the prospect of starting a new distressed debt fund with Ravich. He was living in Los Angeles and working as head of alternative products at TCW – an influential position that empowered him to launch new offerings and make key hires. Tirschwell started consulting for TCW, then joined the company as an employee in September 2016, reporting to Ravich.

Intimate relations between employees and their managers are “strictly prohibited” at TCW, according to the company handbook. TCW was aware that Tirschwell and Ravich had once dated, and it allowed her hiring to proceed. A TCW spokesman said that Lippman spoke to both Tirschwell and Ravich, and that they both pledged to keep things professional.

But by this time, Tirschwell alleges, Ravich had already been pressing her to have sex. In her lawsuit, she claims that “in or about April or early May 2016” the two planned to have breakfast at Jean-Georges, a restaurant in the Trump International Hotel and Tower on Central Park West, where Ravich had an apartment.

According to the lawsuit, Ravich changed the plan and asked her to meet him upstairs at his apartment. When Tirschwell arrived, the suit claims, “he opened the door dressed in his white terry bathrobe”. After Ravich boasted about how much he had done for her, “he then made inappropriate and unwelcome sexual advances”, making her “feel as if rejection would mean the end of Ravich’s crucial support”.

Tirschwell was “worried that if she refused him, the fund itself would never get off the ground”, the suit says, adding that “she reluctantly acquiesced”. The complaint alleges that Ravich took Tirschwell by the hand and “led her to the bedroom, where they had sex”. Afterward, it says, Tirschwell “jumped out of bed”, got dressed and left, feeling “sullied by the experience”.

In her complaint, Tirschwell alleges that this incident was “the first of seven or eight” that Ravich arranged over the course of a year. Ravich “would usually answer his apartment door dressed in only his white terry bathrobe”, suggesting that “he expected sex as part of their business meeting”. Again and again, the lawsuit says, Tirschwell “felt she had no alternative but to acquiesce”. She also alleges that Ravich groped her in the TCW offices.

All the while, Ravich worked to help Tirschwell’s fund get started. Tirschwell alleges that she stopped having sex with Ravich in February 2017, and that afterward, he withdrew support for her fund, depriving her of necessary accounting support, trade settlements and introductions to potential investors, and ultimately conspired with others at the firm to have her fired.

Tirschwell’s experience might seem like the latest in a grim procession of #MeToo allegations. But her claims against TCW, Ravich and Lippman are complicated by a number of factors. Chief among them: Tirschwell can’t remember many of the events in question.

I ‘don’t remember’, 46 times

On a frigid day in February, I go to the law offices of Storch Amini in Midtown Manhattan, where I meet Tirschwell for the first time. We speak for nearly six hours, discussing her career on Wall Street, her experience at TCW and the allegations in her lawsuit.

“He had the power to make or break my professional trajectory,” she tells me. “If he didn’t have that power, I would not have had sex with him. That’s my shame. My shame is that I played his game.”

Tirschwell’s legal filing was thin on details, as is common for such complaints, and I hoped she would clarify exactly what had happened. Eventually, I asked her when the first incident took place.

“I don’t know when the breakfast meeting was,” she says. “I don’t know if it was in April or May.”

There is no record of them having breakfast in April or early May – no calendar appointment or email, for example – and I asked her how the meeting was scheduled.

“I don’t remember how that meeting came to be,” she says.

The first date for which there is a record of Tirschwell and Ravich having breakfast in his apartment is 24 May 2016. When I ask her to describe what happened that day, Tirschwell offers a brief account that matches the claims in her complaint, but does not include any other specifics.

I then ask if there was another such encounter between 24 May and 8 July, the next date there is a record of them having breakfast at his apartment.

“Don’t know,” Tirschwell says.

I ask her to describe what happened on 8 July.

“I don’t remember,” she says.

“Nothing about it?”

“I don’t remember,” she says.

I ask Tirschwell to describe the events of 8 September, another date when there is a record of them having breakfast at his apartment.

“Don’t remember,” she says.

I ask her if she told anyone what was happening at the time.

“I don’t remember,” she says. “I don’t remember talking about it.”

Each time I ask Tirschwell to provide details of the dates, circumstances or experiences of the seven or eight instances she says she had sex with Ravich in his apartment, she struggled to remember the events in any detail. In total, Tirschwell used the phrase “don’t remember” some 46 times.

After asking about the details in her complaint for nearly an hour, I ask her how, after 10 months of this, she finally communicated to Ravich that she would no longer have sex with him.

“I don’t know,” she says, sounding frustrated. “I don’t know. I don’t remember.”

‘Sex, and control’

Though Tirschwell does not recall telling anyone about the alleged sexual harassment while it was happening, at least two people remember hearing about it.

On 24 May 2016, Ulrika Parash, a confidante of Tirschwell’s, got a text from her friend. “Had sex w/Jess this morning,” read the message, which was reviewed by The New York Times.

Parash says that after receiving the message, she spoke with Tirschwell, who told her that Ravich was making it seem as if his support for her fund was contingent on her willingness to have sex.

“He would dangle a carrot and take it back, dangle a carrot and take it back,” Parash says. “It was all predicated on whether she would give him what he wanted, and that was sex, and control over her.”

Tirschwell also told her psychiatrist that she had resumed an intimate relationship with Ravich and “indicated that she didn’t want to continue it” during appointments in 2016 and 2017, according to a deposition of the psychiatrist reviewed by the Times.

And in hundreds of text messages between Tirschwell and Ravich reviewed by the Times, he engaged in banter that crossed the line between the professional and the personal. “Love u,” Ravich texted Tirschwell on her birthday. After Ravich agreed to give Tirschwell tickets to a New York Rangers hockey game, he texted her to ask, “And what do i get:).”

He would sign texts with phrases like “Sweet dreams” and “Xx”. Once, when she texted him an innocuous photo, he replied, “Didn’t know what to expect when I opened a pix from you! :D”. Another time, Ravich seemed to suggest that he wanted to see her in the evening, if not for a houseguest. “At whiskey tasting,” he wrote. “If scott weren’t staying over....”

The volume of their personal texting appears to slow after February 2017, which is when Tirschwell says she ended the sexual relationship. While she continued to sign texts “Xo”, Ravich displayed less affection, and the conversation became increasingly one-sided. Frequently, Tirschwell would try to get in touch with Ravich to discuss business. He tended to reply briefly, or sometimes not at all.

Ravich’s lawyers argue, though, that the documentary trail exonerates him. TCW work calendars, they say, rule out the possibility of a morning sexual encounter for all but three dates between 1 April and 8 September 2016, with one or both of the two either out of town or accounted for. Ravich acknowledges that he and Tirschwell had breakfast in his apartment on those three occasions – on 24 May, 8 July and 8 September – but denies they had sex.

He also disputes that he owns a white terry cloth bathrobe. Rather, his lawyers say, he has two cashmere robes, one pink and one red.

A $100m target

Tirschwell joined TCW in September 2016 at a salary of $250,000, with a guaranteed bonus of at least $500,000. Her employment agreement stipulated that unless her new distressed debt strategy had $100m in assets by 31 March 2017, her contract would terminate.

The target turned out to be ambitious. Tirschwell and people she knew invested about $16m, and Ravich and other TCW employees contributed about $14m. The biggest outside investment, about $20m, came from Michael Milken, the infamous junk bond investor. Ravich had once worked for Milken, and used his connections to help Tirschwell secure a deal.

Over the course of a year, Tirschwell and her team had more than 150 meetings with potential investors. But despite these efforts, no additional investors came on as a result of the marketing. By February 2017, it was clear that the fund was not going to amass $100m, and TCW extended the automatic termination deadline to 28 February 2018.

At times, Tirschwell expressed her frustration with the fund’s performance. “This was a pretty tough week,” she texted Ravich on 17 June 2017. She added that if the product failed to achieve a certain return, “I think we need to seriously consider liquidating. I do not want to lose $ for anyone.”

In her complaint, Tirschwell said that after February 2017, TCW reduced her access to key resources. But in an email she sent Lippman on 16 Nov 2017, with an update on the fund, she expressed some optimism. “Our team seems to be gelling,” she wrote. “I have great hopes for what we can accomplish in a way that reflects well on the broader TCW platform. Thank you for your support.”

By the time Lippman received that email, Tirschwell’s fate at the firm was all but decided. TCW has alleged that her compliance transgressions include executing a trade order after its approval had expired; violating a “short swing” rule, raising concerns about insider trading; and engaging in what amounted to front-running, selling a security she held in her personal portfolio before she sold the same security in the fund she managed professionally. By mid-November, according to the firm’s response to her lawsuit, the decision had been made not to re-up her employment contract beyond February 2018 because her “ability to make good on her promises to raise $100m … appeared speculative at best”.

Tirschwell was also looking for a way out of TCW by September of that year, asking contacts for introductions to head hunters and seeking employment elsewhere, according to communications reviewed by he Times.

Ravich’s lawyers say that he lobbied Lippman to keep her on and pressed for her to receive additional bonus awards. But Lippman was unswayed, and Ravich told Tirschwell that it was unlikely that her contract would be renewed. The two had informal discussions about a severance package, and Tirschwell asked for $2m. Ravich said a severance of around $700,000 was more likely, according to her complaint.

On 5 December, Ravich told Tirschwell that Lippman wanted to meet with her the next day, and that she would likely be told that her contract would not be re-upped. Later that day, Tirschwell made her complaint about sexual harassment.

Meeting with the general counsel, Meredith Jackson, and the head of human resources, the next day, Tirschwell told her story. Upon hearing it for the first time, Jackson was sceptical. “She was talking about what she described as nonconsensual sexual interaction that had happened recently, and she didn’t seem to remember anything about it, which I thought was very strange,” Jackson said in a deposition.

Beyond finding Tirschwell’s allegations hard to believe, Jackson suggested they had the look of a shakedown. “Why hadn’t she raised a complaint earlier?” Jackson said. “The timing was convenient for someone to make a complaint on their way out the door.”

No Complaints

On 27 December 2017, just weeks after he had been accused of sexually harassing one of his employees, Ravich was publicly named to TCW’s board of directors. Ravich’s appointment was decided before Tirschwell lodged her complaint, and the company did not revisit the matter before it was announced.

It was a short-lived tenure. On 4 October 2018, Ravich stepped down from the board after an internal TCW investigation discovered “unprofessional communications” between him and Tirschwell.

Little else has changed. Ravich is still running alternative products at TCW. Tirschwell is unemployed and working with lawyers to pursue her case. And TCW, which in December was named one of the “best places to work” by Pension and Investments, has largely moved on.

The company said in a statement that since 2012, when Lippman became chief executive, the company had “received no complaints of sexual harassment or gender-based discrimination or hostile work environment other than the complaint made by Ms Tirschwell”. Since Tirschwell filed her case, no other women have come forward with similar allegations against TCW or Ravich.

Ravich has offered no explanation for his suggestive texts, or Tirschwell’s contemporaneous accounts to Parash and her psychiatrist. But in a deposition reviewed by the Times, Ravich said that if even only some of Tirschwell’s allegations were true, he should be out of a job.

“If I had sex with Sara while she was an employee of TCW, I should be terminated,” Ravich said. “And I would be terminated.”

Tirschwell, meanwhile, has brushed aside her compliance violations as overblown, and blamed a conspiracy at TCW led by Ravich for her inability to meet her fundraising target. As for why she has such vague memories of the alleged sexual encounters, Tirschwell says she just isn’t sure.

“I don’t know,” she says. “I don’t have it in this head.”

© New York Times