Ex-Cerberus Marketer Accuses Firm Of Misleading Investors

Lisa Marie Vioni said in her complaint that Cerberus Capital hired her as a managing director in January 2012, only to dismiss her 13 months later. The lawsuit, filed April 5 in U.S. District Court in Manhattan, does not specify the dollar amount of damages that Vioni seeks, but it alleges violations of federal and state labor law, gender discrimination and harassment, and violations of the whistleblower protections in the Dodd-Frank financial reform law.

Corey Stark, a partner at the employment-law specialist The Dweck Law Firm LLP in New York, which represents Vioni, declined to comment because the matter is already in court. Vioni could not be reached. Cerberus Capital did not make an executive available to discuss the allegations, but the firm provided a prepared statement to Buyouts.

“Lisa Vioni voluntarily left her position as a managing director in Cerberus’s investor relations department where she was one of a number of investment relations professionals focused on the firm’s residential mortgage-backed securities (RMBS) business,” the firm said in its statement. “It is unfortunate and regrettable that Ms. Vioni has chosen to commence baseless litigation against Cerberus in what appears to be an attempt to be relieved from her non-compete, non-solicitation and other obligations to Cerberus. The allegations in her complaint are without basis in law or fact, and Cerberus will defend itself vigorously.”

The lawsuit says that Cerberus Capital assigned Vioni, an established hedge-fund marketing executive, to lead marketing efforts for its RMBS Opportunities Fund, and she helped to increase the fund’s value to $2.3 billion from $800 million. But she said she realized in September that Cerberus was basing its performance calculations for the fund on reduced management fees and incentive allocations that were offered to certain investors in the fund but not the vast majority of investors.

The suit said Vioni complained to Andrew Kandel, Cerberus Capital’s chief compliance officer, that those numbers were “incorrect, inaccurate and misleading,” citing performance results that were materially higher than most investors were receiving. Kandel agreed to change a footnote in the marketing materials to note those “blended returns,” but the firm “had no intention to disclose to its investors and potential investors” who may have relied on the data.

The suit said that when Vioni pressed her supervisor, Joshua Weintraub, the head of RMBS securities and trading, at a later meeting, Cerberus Capital agreed to discontinue using the blended return data, but that the firm responded by demoting her from head of marketing, excluded her from meetings and from participating in the fund, and assigning her to secretarial duties.

By December, Vioni had determined that a single institutional investor represented 72 percent of the fund’s commitments, the lawsuit said, and argued that such concentration “exposed the fund to potential liquidity problems.” But Cerberus’s response was to intensify its harassment of her and to threaten her future bonuses, the lawsuit said.

Cerberus Capital dismissed Vioni on Valentine’s Day, the suit said.

The suit also alleges that Cerberus Capital paid Vioni and other female employees less than men in similar positions and treated women less favorably than men. It also asks the court to strike down non-compete provisions in her employment agreement.

The private equity industry has long been male-dominated, but as more women have found their way into higher-ranking positions in the firms, sex-discrimination and harassment complaints appear to be on the rise. In the most high-profile example, Investment Partner Ellen Pao filed suit last May against venture capital giant Kleiner Perkins Caufield & Byer, alleging instances of sexual harassment and gender discrimination affecting her pay and career advancement.

Since then, additional lawsuits have been filed, including one against Pantheon Ventures, which was sued by a former principal, and venture firm CMEA and one of its former operating partners, who was accused by three executive assistants of making inappropriate sexual comments, often in front of other executives who allegedly did little to curb the behavior.