July 12, 2018
July 12, 2018
Mike Picarella wanted to protect a co-worker from humiliating sexual harassment. He didn't expect his own life to be destroyed in the process.
By David Dayen
ILLUSTRATIONS BY KRISTIAN HAMMERSTAD
On May 5, 2011, Mike Picarella’s first day at HSBC, his boss wanted to know if he was sexting. “No, no,” he reassured her—his wife was just curious how things were going, so he was texting her back. His boss then inquired whether his wife had ever heard of the three-minute rule. “What’s that?” Mike asked. Well, his boss said, leaning in, if she ever wanted her husband to do something, she would give him a blowjob that lasted exactly three minutes, and voila, her wish was his command. Surveying Mike’s blank stare, she belted out one of her giant, guttural laughs and plopped herself down at her desk, a mere two feet from his.
Mike, a 22-year veteran of Wall Street, learned quickly that this was just the way Eileen Hedges interacted with the world. She was raised in a well-off suburb in New Jersey and joined HSBC, one of the largest foreign-owned banks in the United States, shortly after graduating from college in 1991. It was a time when male behavior on Wall Street was particularly noxious. “Women started getting jobs … and men did everything they could to make them feel like they didn’t belong,” says Susan Antilla, author of Tales From the Boom-Boom Room, a history of women in banking. That meant parades of strippers in the office, Playboy centerfolds hung up at the desks, care packages for female employees containing dildos or calzones shaped like penises. It could also mean verbal abuse or sexual assault.
And yet, Eileen managed to thrive in this atmosphere, eventually becoming head of business development for HSBC in the Americas. She moved up, in large part, by cultivating a reputation for being brash, boisterous and profane. By becoming one of the boys. Short and stocky, with blond hair and a penchant for holstering her Blackberry in her bra, Eileen would pant like a dog with her tongue out when certain men walked by her desk, Mike said. Sometimes, he would overhear her musing about which executives would be better in bed: “Mike H. would be fun but Mike S. would be boring.” (Apparently, there is no shortage of men named Mike at HSBC.)
On most work nights, Eileen posted up in her favorite seat at Windfall, the neighborhood bar a block from HSBC’s offices, where bartenders treated her like Norm from “Cheers.” Mike had even been told there was a drink named in her honor, “The Eileen,” a pink concoction with vodka and club soda. She held at least one performance review with a subordinate at the bar. And from time to time, Mike discovered, Eileen would have an assistant book her a hotel room nearby while her husband and two kids slept across the river in New Jersey. Her drinking buddies became a support network for her, a club, an identity. As she wrote to a male co-worker after a night out: “I’d rather hang out with you guys and laugh. … I at least feel normal?”
Mike wasn’t sure what to make of Eileen, but he had strong incentives not to think about it too hard. “He was hired with a view to ultimately being her successor,” said Ian Mullen, a managing director who helped bring him to HSBC. If Mike did end up taking her job, he’d rise to the level of managing director, the fanciest position of his career, worth at least half a million dollars a year in salary and bonuses.
Mike’s arrival boded well for Eileen, too. Having a viable replacement would set up her own promotion to the upper echelons of the bank, maybe some posh new assignment in Hong Kong or London. “Did I tell you I love my new guy,” Eileen wrote a colleague on Sametime, HSBC’s internal chat network, a couple weeks into his tenure. “I am almost floored. ... I don’t have to go to meetings with him.”
He was making her look good, she was in a position to make him rich, and both of them were poised to get exactly what they wanted. Little did they know what lay ahead for them and for HSBC—the years of acrimony, the firings, the lawsuits, the trial with the surprise decision. And the trouble started just a few weeks into Mike's tenure, when the third member of their team, a junior analyst in her mid-20s whom I’ll refer to as Jill, broke down at her desk, crying and shaking.
The banking industry is hardly known for its moral rectitude. But if you look beyond the executive suites and venture into compliance departments and operations back offices, you’ll find a handful of sticklers and self-appointed heroes who have made it their mission to save Wall Street from its excesses. Mike is one of them.
As a young banker, he spent his free time volunteering at New York Hospital, feeding Jell-O to burn victims. His mother had worked three different restaurant jobs to support him and his brother, and when he became a father, he figured the best way to honor her was to be there for his four children as much as possible. He coached their football and basketball teams. He also taught adult Bible study and served on the church council at St. Luke’s Lutheran on Long Island. “Mike is not about Mike,” says Charles Froehlich, the former pastor there. “He is about helping others.”
But Mike can sometimes act like the kid who tells the teacher she forgot to assign homework. Take the mooing incident. It was the late ’90s, and Mike was working at Morgan Stanley, where all the trading desks had “squawk boxes”—intercoms that analysts and brokers used to relay information during the trading day. Mike’s problem was that some of the young guys at Morgan Stanley abused their squawk boxing privileges by mooing loudly into them, disrupting colleagues who were trying to get work done. Mike asked his boss to tell everyone to stop, and a meeting was scheduled during market hours. That meant the traders had to call in. And as anyone who has ever met a banker could have predicted, midway through, somebody busted out the gnarliest Mooooooo! in the history of moos. The whole floor went nuts.
“I still get teased about this,” Mike says. “My friend referred to me as the guy who put an end to the mooing.”HSBC “is the poster child of regulatory infraction—the gift that keeps on giving when I give studies on how not to do things.”
When HSBC called Mike in for an interview in early 2011, he knew almost nobody employed there and had trouble picking up any color about the organization. HSBC wasn’t like Morgan Stanley or Lehman Brothers or any of the other banks where he’d worked. It had $2.5 trillion in total assets, nearly three times more than Goldman Sachs, but the culture was insular, bordering on impenetrable. Most promotions came from within. Some senior managers had even gotten their start as tellers.
After the collapse of the financial industry in 2008, HSBC seemed motivated to lead the industry in scandals. There were accusations of doing business with criminals and rigging markets. In 2010, the year before Mike started, French investigators announced that they had information on 79,000 clients who may have been using HSBC’s private Swiss bank as a way to avoid taxes. (France’s budget ministry reportedly recouped more than $1 billion in penalties.) The same year, U.S. regulators identified “deficiencies” in HSBC’s anti-money-laundering practices, and a Senate report admonished HSBC for letting an Angolan central bank representative attempt $50 million in questionable transfers. HSBC may have even set up offshore accounts for the Angolan rep in the Bahamas.
“It is the poster child of regulatory infraction—the gift that keeps on giving when I give studies on how not to do things,” says Mayra Rodriguez Valladares, a consultant to banks and regulators who has worked with HSBC.
Mike’s role on the sales business management team included pitching new clients and making sure the company hit revenue targets. Still, he was irresistibly drawn to the compliance duties of his job. He saw issues right away—unnecessary bottlenecks, undefined processes and just a general looseness with the rules. In 2011, all major banks, leery of the new Dodd-Frank financial reform package, vowed to make regulatory obedience a top priority. And Mike sincerely believed his bosses would reward him for spotting problems before the feds did. “I thought they could use someone like myself,” he said. He was wrong.
The trading floors at HSBC headquarters in New York are giant, wide-open spaces, rollicking and loud, with hundreds of employees packed in shoulder to shoulder, back to back. You can read your neighbor’s computer screen or hear someone talking to his wife a couple seats down. Privacy is a joke, personal space a luxury best forgotten.
Which is why Mike found it so unsettling, a few weeks into the job, to see Jill crying at her desk. His desk was wedged in between Jill’s and Eileen’s, and at first, he pretended not to notice. But as the days went by, he kept finding Jill breaking down in different parts of the office: whimpering inside glass-walled conference rooms, outright sobbing on the leather couches in the ninth floor lobby.
Mike felt paralyzed. Eileen had previously told him that Jill’s boyfriend beat her and that she was close to being fired for a subsequent dip in performance. “For a while there, I believed Eileen,” Mike said. “I kept [Jill] at arm’s length. I didn’t have a normal relationship with her. I thought she was toxic.”
And so it went until Mike began to detect a pattern. A few times a week, not long after the stock exchange’s closing bell, Eileen would beg Jill to come to Windfall with her. Jill would resist at first, but ultimately relent. Then the next day, Mike said, dozens of people, including senior executives, would crowd around Eileen’s desk as she regaled them with stories that often revolved around Jill’s sexual adventures from the night before. Eileen would try to be low-key when spreading these tales, but Jill sat only a few feet away.
“I would see [Jill] slam the phone and start crying,” Mike remembered. “Sometimes she would say ‘I fucking hate her’ out loud, and Eileen would say, ‘Did she say that to me?’ And then [Jill] would give her the finger. Nobody does that to the boss, especially on Wall Street, and survives.”
In time, it became clear to Mike that Eileen didn’t just want a drinking buddy. He felt she was using Jill as flypaper to attract senior executives and big clients to the bar—and, five years later, when the matter finally landed in court, 900 pages of discovery documents and the testimony of several witnesses helped back up his account.
“Haah … you just like blonds named [Jill],” Eileen wrote to a high-ranking HSBC manager. He replied, “well, i need to admit that she is hot!” Eileen promised to make Jill available when he visited New York the following month. Days before the visit, Eileen had this exchange with him on Sametime, the interoffice chat network
In another thread, Eileen asked a co-worker about the previous night: “Do you remember licking [Jill’s] face?” The man wondered if Jill was mad, and Eileen replied, “No, she was laughing about it.”
Mike overheard Eileen on the phone making similar comments. “She would be talking about [Jill], saying she needs a guy like you. After, I would hear Eileen persuading [Jill] to come out for just a few. It was never just a few.”
Gossip about Jill traveled quickly through the open office. One former HSBC staffer, who asked to remain anonymous because she still works in the industry, said, “It was out there in the organization. I don’t think people fully understood how much [Jill] was being impacted.” Sametime chats between Jill and Chris DeLuca, a work friend of hers, reveal a woman being slowly ground down by stares and snickers and half-whispered comments.
In separate chats with DeLuca, she complained that “just hearing [Eileen’s] voice makes my skin cringe” and “I can honestly say she makes me hate my job, and makes mike and [me] miserable.”
In court documents, both Mike and Jill testified that they believed Eileen derived power from demeaning Jill. Setting up a night out with a pretty young woman helped her build gratitude among clients and executives. It also gave Eileen ammunition if someone crossed her. According to Mike, Eileen repeatedly said that if she got fired, she would dish on everyone in the office: all the affairs, all the lies. He added that she bragged about keeping a running tally of who was having sex with whom.
These threats reflected Eileen’s insecurities within HSBC, where she saw herself as the victim of a sexist double standard. She would occasionally express concern that her partying put a cap on her career prospects. In a March 2012 Sametime chat with a co-worker named Christina Baldwin, she despaired:
Jill is bound by a confidentiality agreement and did not respond to interview requests for this story. But she corroborated much of Eileen’s conduct in a deposition for a federal trial. “I often felt she would try to offer me up to clients sexually, both internally and externally,” Jill said. “She would often make comments about me or lies about me and share them with other employees. One time I had a suitcase for a trip and she pulled out a pair of shoes and in front of all my colleagues said, ‘Look, aren’t these’—I think she used the word—‘fuck-me shoes.’”
Jill also alleged inappropriate touching, saying that Eileen once attempted to pull down her blouse around other employees. In another incident, at Windfall, Jill said Eileen “grabbed my buttock.” (Mike was there, too, and says the force of Eileen’s butt smack was so great that Jill was briefly lifted off the ground.)
Much of Jill’s testimony focused on an HSBC-sponsored conference in Key Largo, Florida, that turned into an old-fashioned Wall Street bacchanal. Jill said she was harassed by several HSBC executives, including one senior manager who talked about “eating out my ass. He described how he just wanted to—and I think these are his words, not mine—‘get up in there’ at this particular event.”
Jill described spending some of that same night in Key Largo fending off the advances of Eduardo Legorreta, the head of global market sales with HSBC Mexico. “He put his hand on my leg, trying to put it up my dress, and I hit him away. Throughout that evening [Eileen] was encouraging this type of behavior,” Jill testified. At one point, she said, Eileen physically pushed her toward Legorreta. Jill’s Sametime chats shortly after the incident tell the same story:
And yet, she, too, felt paralyzed when it came to Eileen. At one point, she told DeLuca that she’d “fucking had it” and was “done w her” and that she’d tell human resources “everything.” She never did.
“Try and get out of there at a decent hour. No Eileens 2nite,” DeLuca wrote to Jill during one bad patch. “Thanks—yeah no def not any eileen’s,” Jill responded. But in this case, as in so many others, she quickly found herself back at Windfall, drinking late into the night and then being run through the rumor mill in the morning.
In October 2011, five months after Mike started at HSBC, Eileen took a short medical leave to have weight-loss surgery. When she returned in November, Mike told her she looked great. “Yeah, but I lost weight in all the wrong places,” Mike recalled her saying. “It’s changing the shape of my nipples.” Eileen then pulled down the top of her dress, exposing her right breast in the middle of the trading floor. According to both of their testimonies, Mike and Jill quickly turned to each other, mouths agape, while Eileen laughed and walked away.
Mike figured it was time to approach Ian Mullen. In his first few months on the job, Mike would occasionally seek Mullen’s advice about how to maneuver through HSBC’s bureaucracies. He saw Mullen as a breed apart within the organization, someone who could serve as a mentor. He wanted to know how he would handle the flashing. “My initial reaction was shock,” Mullen said. “I thought I should go to HR myself. If a man had done that to a woman, the man wouldn’t have remained for more than a few days.” But Mike asked him to remain quiet—for a little while at least. He feared reprisal and felt too new to escalate charges against his boss.
After all, Mike’s first year was going well. He streamlined the system for authorizing new client accounts. He cleared the way for HSBC to sell Japanese government bonds in the U.S. And he swerved around an administrative barrier in HSBC's business with another bank that freed up $60 million in revenue. “He uncovered quite a lot of things never brought to management,” Mullen said. “He was one of the top business managers.”
At the end of December, Eileen rated Mike’s 2011 performance as “strong” and told him she would have checked the box for “exceeded expectations” had he been there the entire year. “Mike has taken good initiative. ... He’s developed good relationships and is starting [to] gel within the HSBC processes,” she wrote. There was a small section about him needing to be “better at communicating among all relevant parties,” but everything else appeared on track.
Still, Mike found himself unable to tolerate Eileen’s behavior, and in early 2012, he asked her on several occasions to start treating Jill better. He specifically mentioned dragging Jill to bars and gossiping about her sexual exploits afterward. “I would say, ‘[Jill] is crying every day, it’s not healthy for her well-being,’” Mike recalled. “It would work with Eileen for two or three days, but then she would go right back.”
Almost immediately, Eileen cooled toward Mike. “He kisses ass and it makes me sick,” she told Jill in a Sametime chat from April. Mike recounted an incident where he was in a meeting and Eileen started banging on the conference room windows to get his attention. When he came out, Eileen said she just wanted him in a different meeting. “I don’t know the reasons, but you seemed to be on the attack with me,” Mike wrote her in an email. “From my perspective it’s humiliating to be treated that way in front of others.”
On April 11, nearly a year into his tenure at HSBC, Mike showed up unannounced at the 12th floor offices of the human resources department. He specifically sought out Ellen Weiss, the head of HR for global markets, because of her close friendship with Eileen. Weiss kept a picture of Eileen’s two sons on her desk and told Mike she thought of them like her own children. Mike figured she would know how to tame his boss better than anyone.
After asking that the conversation remain confidential, Mike told Weiss about the sexual chatter, the nightly drinking, the rumor-mongering about Jill. He explained that after he tried to talk to Eileen, she started bullying him. He insisted that he wasn’t lodging a formal complaint against his boss, just asking for counsel. And he remembers suggesting that Weiss speak directly with Jill to get the full picture. In a recap email Weiss composed for herself that night, she wrote, “I told Mike I take these matters very seriously and if these behaviors are true they are not acceptable. I told him I wanted to talk to Eileen but he asked to talk to her first.”
The meeting broke up around 6 p.m., two hours after it started. By 8 p.m., according to Mike’s recollection of a later conversation with Jill, Eileen was on the phone with Jill grumbling about how Mike had accused her of sexual harassment. Weiss later denied alerting Eileen, saying she only notified the bank’s legal department, but several attorneys who specialize in these sorts of workplace claims agreed that the timeline was all too plausible. “[HR] immediately tells the harasser,” said Nancy Erika Smith, one of the lawyers who represented Gretchen Carlson in her case against former Fox News chairman Roger Ailes. “And the harasser and their friends and colleagues start retaliating right away.”
After Eileen learned of Mike’s visit to Weiss, she began to publicly criticize him over seemingly unrelated issues. “I want to f’in scream,” Eileen wrote to a colleague. “he’s a god damn svp… what in the world am I going to do w/him.” Eileen complained to Jill, too, saying she felt “so disrespected,” “beyond floored and hurt” and “so mad I cannot talk.” Jill chimed in, saying Mike had “no loyalty and [was] not a team player… 2 things that annoy me the most.”
Asked about her cutting comments toward Mike in later testimony, Jill said she would routinely go along with whatever Eileen said to keep the pressure off her. “Had I disagreed, despite even if I may not agree with her statements, she would have targeted her anger and aggression towards me,” she said.
A week after going to HR, Mike asked Eileen if they could set up weekly check-in meetings. These conversations would ostensibly be about work, but he believed they’d also give him a chance to temper Eileen’s behavior toward Jill without involving HR more than he already had. Still, shortly thereafter, Weiss told Mike that, due to the seriousness of the charges, HR needed to question Eileen independently. He agreed on the condition that Weiss keep his name out of it. “It’s possible that Eileen will make her own conclusions as to who she thinks brought this to our attention,” Weiss wrote to Mike in an email.“It was a knot-in-your-stomach moment,” Mike said. “You knew you’ve been betrayed.”
Sue Jang, who worked for Weiss in HR, met with Eileen on April 26. In notes from that meeting, she wrote that Eileen began demeaning Mike’s work performance before she was able to ask a single question about Eileen’s behavior. That was curious because one day earlier, when Weiss spoke with Pablo Pizzimbono, Eileen’s boss and the head of global market sales for the Americas, Pizzimbono immediately asked if Mike had made the complaints. He proceeded to say that Mike was not performing well and that he was planning to push him out and put two junior people in his place. “Since Mike was unhappy with [his] bonus he has checked out,” Weiss wrote in a recap email.
Indeed, Mike had received a first-year bonus that was far lower than the number he was verbally promised. This angered him and even led him to ask a headhunter about new job leads. But he contends that his performance didn’t suffer at all.
After HR’s meetings with Eileen and Pizzimbono, Mike asked Jang if they knew who had made the initial complaint. “She laughed and giggled and said, ‘Yes, they guessed it,’” Mike said. “I said, ‘That’s not funny, you’ve ruined my career.’”
Meanwhile, Jill’s own career was about to be upended. She had struck up a romantic relationship with Jamie Rist, a married equity finance trader at HSBC. The relationship might have gone unnoticed had Rist’s wife not managed to get into the building one day and confront Jill outside the women’s restroom.
When Ellen Weiss investigated the incident, she asked Jill if she was romantically involved with Rist. Jill said she wasn’t. So in what was apparently an option for HR investigations at HSBC, Weiss began to monitor Jill’s emails. She found references to Rist as Jill’s “boyfriend” and a discussion of a weekend they spent together on Long Island. In a follow-up meeting, Weiss confronted her with the evidence, and Jill broke down. She apologized for lying. She said she didn’t think the relationship had anything to do with work since she and Rist were in separate departments. HSBC disagreed. On May 31, Jill was fired without severance.
“Professionally and personally, I will miss her,” Eileen wrote to a colleague in a Sametime chat.
Mike was unnerved. He found it ominous that at no point in the six weeks between his first meeting with Ellen Weiss and Jill’s termination did anyone in HR ever ask her about the allegations against Eileen. And he heard from Rist that Eileen had made a big deal about Jill’s run-in with Rist’s wife to distract from her own troubles. As Rist would later tell Mike, “You got [Jill] shot.”
HSBC’s worries at the time extended far beyond the HR department; the very existence of the bank was in question. On July 17, 2012, about six weeks after Jill’s firing, the Senate Permanent Subcommittee on Investigations released a 334-page report that accused the bank of helping to launder tens of billions of dollars for drug traffickers, as well as countries prohibited from doing business in the United States. Documents reviewed by the subcommittee also showed HSBC employees pressuring internal compliance officers to ease up on scrutinizing these illegal transactions. Why? “To please a wealthy client,” according to the report.
This tracked with Mike’s own experience at the bank, where he said his inquiries into compliance issues often led to grief. For example, HSBC’s anti-money-laundering policy required every client account to have a designated relationship manager. So in April 2012, Mike emailed senior staff to request help identifying managers for 852 accounts that may have been “orphaned.” Upon receiving his email, Suzy White, the chief operating officer for Mike and Eileen’s division, chewed him out. White said she had just told executives in London that the U.S. business had no orphan accounts—why was Mike trying to undermine her? He replied that he wasn’t sure there were orphans; he merely wanted help filling in blanks in the system. White wasn’t having it. She asked Mike not to copy her on future emails, and in a Sametime chat with Eileen, she complained that he “doesn’t realize what this type of note can do… we will all look stupid and lose credibility.”
In later testimony, White explained that emails to superiors had to be done “the right way.” She added, “Unfortunately, we keep information at HSBC in lots of different places,” and Mike had merely unearthed a file that wasn’t up-to-date. But that’s part of what compliance is all about—making sure records of all bank activities are accurate and ready for regulators to examine.
Between the blowback on compliance matters and what Jamie Rist had told him about his role in Jill’s firing, Mike felt his job was in serious danger. He had a card to play, though. Weiss and Pizzimbono had been asking him for more information about the Key Largo event. With so many HSBC employees in one place, any misbehavior there represented a risk for the company. So Mike started to gather intel. He told Pizzimbono what he had heard about Legorreta’s groping and Eileen’s alleged encouragement. Mike also revealed Eileen’s breast-flashing incident. But, according to Mike, even though Pizzimbono asked for the report, he didn’t welcome it, in large part because Legorreta and Eileen were his direct reports. “He said, ‘Now that you’ve told me, I have to tell HR. You’re either stupid or a genius,’” Mike remembers.
HR reopened the investigation, and Eileen denied everything once again. Other employees, including Rist, corroborated some of Mike’s claims. By the end of July, Eileen was stripped of her managerial responsibilities and later given a different assignment within HSBC, ironically titled “Change the Bank.” In response to my many questions about her conduct, Eileen said, “I am not going to get into a back and forth on allegations that occurred almost a decade ago, but I have and will continue to deny any wrongdoing.”
After Eileen’s reassignment, Mike asked Weiss and White if he would be stepping into Eileen’s position, as he had been promised when he took the job. But there was no announcement throughout the summer. Shortly after Labor Day, Mike was sitting in a large compliance meeting that Eileen also happened to attend. Outside the glass walls of the conference room, he saw White and Pizzimbono, his two superiors, walking side by side. White looked straight at Eileen and gave her a big smile and a wink.
“It was a knot-in-your-stomach moment,” Mike said. “You knew you’ve been betrayed.”
Several days later, Mike was told that he wouldn’t be taking Eileen’s job. Instead, he would report to Carol Jenner, a vice president whose title was junior to his. Pizzimbono and White said Jenner was chosen for her operational risk experience, although Mike had worked far longer on exactly that issue.
“In all my 20-plus years in banking, I’d never seen anybody in such a scenario where they’ve had a more junior [titled] person than themselves as a boss,” Ian Mullen said. He considered the move an act of “constructive dismissal” to get an employee so fed up that he would exit of his own accord. “If I was trying to get someone to leave, that’s the type of thing I would do,” he said.
Mike would also lose control of one of his biggest compliance tasks: making sure that HSBC was properly documenting whether its sales staff was giving suitable financial advice to customers. He had discovered that the investments of hundreds of clients were never assessed, and that dozens had never even been entered into the company’s system. Mike created a PowerPoint presentation outlining this, expressing concern that “we have issues undisclosed to senior management.”
Though she later acknowledged the assessment process was “sloppy,” Suzy White once again objected to Mike sending bad news up the chain. She then made Jenner the lead on the issue, while claiming to assign Mike “higher-level work.” In an email to HR explaining her decision, White described Mike’s performance as “not very impressive, clearly Mike does not see himself part of the team. … [E]ven in his power point he writes in the third person, no ‘We’ or ‘Our’ just ‘HSBC.’”
Mike couldn’t shake the feeling that he was being retaliated against for elevating sexual harassment complaints—and that the retaliation also conveniently sidelined his questioning of compliance issues. Moving him into what was essentially a junior position limited his exposure to HSBC’s internal operations and contained his objections, at a time when pressure on the bank was intensifying.
On December 11, 2012, the Justice Department followed up on the damning Senate report by announcing a $1.9 billion deferred prosecution agreement (DPA) with HSBC. It was one of the largest money-laundering penalties against a bank in U.S. history. HSBC, the report said, didn’t just look the other way when it came to illegal transactions. Bank employees stripped out references to Iran, which was under U.S. sanction, to avoid detection. HSBC’s Mexico operation also ran a special “Cayman Islands branch” where any Mexican citizen could open a U.S. dollar account. Drug lords even designed specially shaped boxes filled with huge sums of money that slid easily through HSBC Mexico’s teller windows.
Wall Street critics grumbled about the lack of criminal charges against the bank. But Justice Department officials insisted that a “sword of Damocles” now hung over HSBC’s head and implied that the smallest misstep could lead them to reopen the case. This would put HSBC employees at risk of criminal convictions and the bank itself in a position to lose its U.S. banking license. The government also appointed an independent monitor named Michael Cherkasky to burrow into the darkest corners of the bank to find compliance deficiencies.
This left HSBC with a choice: It could either clean up its act or turn even more inward. Management’s decision was clear. “On some compliance issues I asked, ‘Will we self-report?’” Mike recalled. “And they would say, ‘Are you crazy? We have a DPA over our head.’”
In October 2012, Jamie Rist was attending an HSBC conference in Canada when Suzy White pulled him aside and told him about a “complicated investigation” involving human resources and Mike. White, who was not Rist’s manager, advised him to stay out of it. If HR calls you, call me first, he remembered her saying.
A couple weeks earlier, Mike had forced a new investigation, focused on the retaliation against him. First, he called HSBC’s Employee Integrity Hotline. He had been under the impression that the hotline would connect him to a third-party service. After calling, however, he quickly heard from Laura Kane, an HSBC HR representative who sat right next door to Ellen Weiss. Fearing another run-around, Mike went directly to the head of HR for HSBC in the United States, Mary Bilbrey. According to Mike, she assured him that she took his claims seriously and that her HR team would look into the principals involved, as well as the HR department itself.
Those who work for human resources occupy a nearly impossible position within the corporate world. On the one hand, they’re tasked with ensuring a healthy work environment for all employees. On the other, they’re subordinate to senior managers and often don’t have the leverage to resolve issues where a leader is accused of abusing his power. “Companies don’t want to have to face the fact that someone who produces a lot of income for them may not be able to work there anymore,” says Carol Gordon, who worked in HR for financial institutions for 35 years.
The belief that HR is biased toward management chills rank-and-file employees from ever coming forward. A bipartisan task force commissioned in 2016 by the Equal Employment Opportunity Commission cited research suggesting that between 87 and 94 percent of harassment claims go unreported. Gordon recommends that firms employ external legal counsel for the most sensitive cases to remove conflicts of interest, but that’s an added and largely unwanted expense for most companies. The EEOC can also help resolve complaints, but the agency is badly understaffed and under-resourced.
When Bilbrey’s team questioned Pizzimbono and White, they both rejected the notion that they had retaliated against Mike, and White said that there was no truth to Rist’s claim that she had tampered with the investigation. Ellen Weiss argued that her staff had dealt with the allegations against Eileen capably and professionally. And these denials appeared to be enough for HR; the investigation wrapped up quickly. “I’m trying my best not to be biased but I am thinking we have a boy who cries wolf,” Laura Kane wrote on Sametime to a member of Bilbrey’s HR team days into the investigation. “I was thinking same,” was the reply.Practically every interaction around the office felt to Mike like a provocation. He came in every day not knowing whom to trust or how he would be tormented.
However, in a totally different department, Rist also felt he was being retaliated against. In a later legal complaint, he said that after he had corroborated Mike’s story about Eileen’s behavior, he was forced to unload many of his accounts to junior team members. He also saw his annual bonus fall by 82 percent.
Sensing a pattern, Mike called Jim Hubbard, an employment lawyer who had helped win a retaliation case against banking giant UBS a decade earlier. Mike connected Hubbard with Jill, and both would eventually hire him as their lawyer, as would Rist.
At the end of 2012, Hubbard sent HSBC a “litigation hold letter” on behalf of Jill, asking the bank to retain all relevant documents involving her, Rist and Mike. Hiring a lawyer seemed to accelerate Mike’s troubles inside the bank. One by one, his work responsibilities were stripped away, until there were hardly any left at all. Strategic planning meetings were held without him, working groups he led were disbanded, approvals he administered were handled by Jenner and others. His name showed up repeatedly on a “Personal Conduct Case” list, an internal roundup distributed by HR to senior management of people engaged in discrimination, harassment or fraud.
Mike did receive one new assignment: Every week, he had to create a report for senior management in London by Monday morning based on information that wouldn’t come in until Friday night. He was given this task a day after he chatted with Pizzimbono about how busy his weekends were, between kids’ hockey games and other family obligations. “I thought he was being friendly,” Mike said.
Practically every interaction around the office felt to Mike like a provocation. He came in every day not knowing whom to trust or how he would be tormented. “It’s a different type of stress that most people don’t understand until they go through it,” Mike said. And yet, he confided in almost no one outside the office—not his pastor, not even his wife, Andrea, whom he said he didn’t want to burden.
In their initial meeting, Mary Bilbrey asked Mike to keep her informed of any other retaliatory measures against him. Mike took this request to the extreme, sending a flurry of emails to prove that his confidentiality had been compromised and his reputation irreparably harmed.
Some notes made Mike seem overly paranoid. He thought the person who sat behind him was reading his computer screen. He even complained about Carol Jenner’s humming, which he found distracting. Other reports depicted more clear-cut examples of taunting. “Yesterday afternoon two Sr. Managers made disparaging comments towards me at the elevator banks, ‘there’s Picarella better watch what we say,’” read one. In another, a colleague warns Mike as he opens his iPad: “Mike, day trading stocks is a violation of company policy as is using your personal iPad. Should we report [you] to HR and compliance?”
Sometimes, he was made to question his senses. In an email from March 2013, Mike wrote that he was at his desk when the administrative assistant who sat next to him walked by and “in a serious tone told me that I tried to trip her and that she almost tripped.” Later in the day, she got up from her desk, leaving her drawer open. “When she returned,” Mike wrote, “she accused me of stealing. … She was not joking.”
By the summer, Mike was the only person directly involved with the sexual harassment saga still at HSBC. Jill was working at a different firm in the finance industry and had reached an undisclosed settlement with HSBC rumored to be in the low seven figures. Eileen was fired a year after she was reassigned; according to Bilbrey’s later testimony, her behavior wasn’t consistent with HSBC values. But Mike had heard she received a soft landing: a severance package worth about $110,000, as well as a couple months to find a new job. An HSBC vendor called Genpact picked her up shortly after her last day.
It would’ve been easier for Mike to take a job anywhere else. But he didn’t want to give the bank the satisfaction. “I started out fighting for the young lady, then for my life, my job and the principle,” he said.
Around this time, Mike and Rist lodged official complaints with the EEOC. It took nearly a full year for the agency to issue them “right to sue” letters, by which point Rist had accepted another job. In June 2014, they both filed lawsuits alleging retaliation by HSBC. (Only with the lawsuit looming did Mike finally tell his wife what he had endured.) The case made him a mini-celebrity in his small town on Long Island. The local tabloids, the legal blogs and the Financial Times were unable to resist a tale of sexual intrigue at a big bank.
Naturally, this was terrible news for Mike. He ended up being managed by someone in the precious metals division, even though his job had nothing to do with precious metals. His boss there, Michael Karam, a large and imposing man, didn’t do much to hide his distaste for him. In an email to a colleague, Karam referred to Mike as “the hr related problem,” and he once promised Carol Jenner that he would “marginalize his behavior.”It would’ve been easier for Mike to take a job anywhere else. But he didn’t want to give the bank the satisfaction.
Throughout 2014, Karam demanded that Mike set business objectives. Mike replied on several occasions that without actual responsibilities, his objectives couldn’t be defined. And on and on they went, never reaching a resolution, only talking to each other face to face a handful of times, until Karam finally set a meeting for Mike’s mid-year review—in November, a week before Thanksgiving. It did not go well. In a recap email sent to Mary Bilbrey, Mike said Karam handed him a piece of paper with a description of his “performance gaps,” citing several incomplete projects. “Mike is elusive, doesn’t take ownership of his work and lacks initiative,” the review stated. While Mike was scanning the document, Karam yelled at him to look him in the eye. “He’s leaning across a small table with his finger in my face, his face is beet red,” Mike explained. “I sat back and said, ‘I’m not going to fight with you.’”
Afterward, Mike told HR that he “feared for my safety,” and yet another internal investigation was launched. HR instructed Mike to work from home until the inquiry concluded, but he says he didn’t get the message, which was sent out late in the afternoon the day before Thanksgiving. So when he swiped his security card in the lobby the following Monday, he was surprised to find it didn’t work. Dozens of colleagues blew past him until a friend eventually let him up. The story made its way into the New York Post. First line: “HSBC is trying to shut the door on sexual harassment allegations—literally.”
Mike never made it to his desk again. In January 2015, Dan Silber, an HSBC managing director, hosted a biweekly sales team conference call where he notified everyone that the bank was being “looked into” for potentially violating conflict of interest laws. The next day, a New York Post reporter contacted Silber about the call, and HSBC immediately suspected that Mike was the leaker. (He denies it.) In a subsequent inquiry, HSBC’s Financial Crime Investigations unit could not “identify any definitive evidence linking Picarella or any other HSBC employee to leaked information,” but concluded it was “highly likely” that Mike’s lawyer or an associate had spoken with the paper. And so when HSBC fired Mike on March 26, 2015, for “significant performance issues,” the termination letter also included an extra paragraph blaming him for being “either directly or indirectly” responsible for the leak.
The FCI probe contained another nugget, however. The investigators searched years of Mike’s email traffic, finding it mostly to contain “interaction with his management that was performance related. What began as positive feedback appeared to deteriorate in March or April 2012,” right when he first alerted HR of Eileen’s behavior. Inadvertently, HSBC’s own investigations unit had discovered a timeline that seemed to corroborate Mike’s version of events.
On Labor Day weekend 2015, Mike took his family to Fire Island, a vacation spot for New Yorkers who can’t abide (or afford) the glammed-up vibe of the Hamptons. He had always considered it a special place. Two decades earlier, he met his wife, Andrea, in a shared house there. And he returned enough over the years that he could mark time by watching his four children grow up on the white-sand beaches.
But this year, more than any other, Mike needed the salt air. With no job and no prospects, he had been left with too much time to think about the trial. He stewed about the strength of HSBC’s legal team, which included not only Eugene Scalia, son of the late Supreme Court justice, but also attorneys from Boies Schiller, the notoriously aggressive white shoe law firm. He wondered why, in a mediation conference for his and Rist’s cases, HSBC had offered Rist a payout in the mid six figures but wasn’t willing to throw him a penny. (Rist didn’t take the settlement.) And he obsessed over his disintegrating career.
When Mike reached out to headhunters and industry friends, he said they informed him that the publicity from the case made it hard for them to help. In particular, the allegation that Mike leaked private information was a career-killer; nobody wanted that kind of threat in-house. An interview at Morgan Stanley was going great until someone asked why he left HSBC. He couldn’t even land a job as a deputy treasurer for a small town in Suffolk County, or as an operations manager at a retirement home.
Sitting with their toes in the sand, looking out at the Atlantic Ocean, Mike and Andrea launched into one of those dreaded big-picture conversations about their finances. How long could they survive on her comptroller’s salary alone? Would they be able to send the twin girls to college in two years? Suddenly, Mike found himself shaking uncontrollably. His throat swelled, his chest tightened, his breath came up short. He thought he was going to die.
After paramedics airlifted him off the beach, a neurologist told him that he had suffered what it’s now impolite to call a nervous breakdown. Mike was put on Xanax and Lexapro, the first medications harder than NyQuil he had ever taken in his life. Though the pills smoothed out his anxiety, they also left him exhausted. He would drive his son to hockey practice and get home completely wiped. He jumped on and off the medications, the panic still rising occasionally. For more than a year, he spent whatever leftover energy he had readying himself for the trial, which was scheduled to go before Rist’s. Finally, he thought, he’d make HSBC pay for the mess his life had become.
When it began, on a sunny December day in 2016, Mike’s lawyer, Jim Hubbard, assured him the case was a winner. “He was like, this is it, this is a horrible case for the bank,” Mike said. But HSBC’s lead counsel was Randall Jackson, a former federal prosecutor hailed as one of the best young trial attorneys in the country. From the outset of the nine-day trial, he followed a time-tested strategy favored by powerful people and institutions, from big banks to Big Tobacco to Bill Cosby’s defense team: paint the accuser as an incompetent, greedy malcontent.
Jackson used chat messages and emails to argue that Mike, from the day he started at HSBC, was “one of the worst performers at his level. … A person who frankly failed to live up to professional standards in pretty much every way that an employee could fail.” And he marched in a collection of HSBC employees—Suzy White, Mike Karam, Pablo Pizzimbono—to back him up.
Everything Mike believed was evidence of mistreatment, Jackson recast as proof of his cravenness. He said Mike was stripped of his responsibilities because he was lazy and that his fights with colleagues were perfect examples of Mike’s inability to work with others. Jackson explained how Mike schemed to benefit from Jill’s misfortune, filing HR complaints as “a way to get a lottery ticket” from the bank. “To whatever extent you feel sympathy for Mr. Picarella,” Jackson said, “first of all, I submit he’s fine. He made millions of dollars on Wall Street, he’s fine.”
It was mere weeks after Donald Trump’s election, and in a deft stroke, Jackson implied to the Manhattan-based jury of eight women and one man that Mike was a spiritual cousin of the new president—loutish, entitled, sexist and rich. He berated Mike for not supporting the elevation of Carol Jenner, “one of the most respected employees at the entire bank.” Jackson also surfaced a chat between Mike and Eileen where Mike said he “mentally strangled [his wife] half a dozen times” during a recent fight. On the witness stand, Mike passed it off as a joke. But Jackson took the best thing Mike had going for him—that he had risked his professional life to help a female colleague in trouble—and muddied it by making him look like just another Wall Street chauvinist.
The case was about retaliation, not sexual harassment, so Hubbard had to prove there was a causal relationship between Mike’s whistleblowing and HSBC’s actions against him. While several of the most sordid details were revealed—Eileen offering Jill to clients and executives, the breast-flashing incident—they were not the focus of the trial. Far more attention was devoted to whether Mike talked on his cellphone too much. Jackson spotlighted Mike’s years of stress about being mistreated, which, out of context, could sound loopy. In two days of cross-examination, Jackson brought up the increasingly absurd complaints Mike made to HR: feeling like someone was reading his computer screen, being annoyed by Carol Jenner’s humming. “I was following the instructions of Ms. Bilbrey to let her and her team know of anything that was happening against me,” Mike said.
All the while, Hubbard, seemingly confident in his case, mounted what Mike felt was a muted effort on his behalf. For example, after complaining that Jackson made interpretive arguments in his opening statement instead of just outlining facts, Hubbard added, “I didn’t object to it because I’m not going to interrupt in front of the jury.”
“Are you asking me to do anything at this point?” the judge asked.
Hubbard had a lot of material to work with—everything from small flourishes, like Mike’s son being the one to open his dad’s termination letter from HSBC (he mistook it for a bar mitzvah invite) to bigger deals, like positive feedback Mike received from co-workers in his 2012 year-end review, which came well after he reported sexual harassment. “Mike is a pleasure to work with and always carries himself in a professional manner,” wrote one respondent. “Mike identified operational risks … and proposed solutions to eliminate the risks,” wrote another.
But Hubbard didn’t present those comments or call those witnesses. Instead, he relied heavily on Mike’s testimony, thinking it would be enough to persuade the jury. “He’s the main witness on our end,” Hubbard told the judge.
The other key plaintiff’s witness was Ian Mullen. He testified that Mike was hired to be Eileen’s replacement and argued that Mike saved the bank millions of dollars by “highlight[ing] a number of issues that no one highlighted before.” He also said Mike was the earliest person to work and among the last to leave, contradicting the claim of laziness. But Jackson got Mullen to admit that he had moved out of Mike’s division by November 2011 and didn’t get a direct perspective afterward.
The jury didn’t take long to come to a decision. It had to answer four questions. Did Mike engage in protected activity by reporting sexual harassment? Yes. Was HSBC aware that it was protected activity? Yes. Did HSBC take a “material adverse employment action” against Mike? Yes. Was this action taken because Mike reported sexual harassment? No.
As one of HSBC’s in-house lawyers hollered in delight—prompting a stern admonition from the judge—Mike sat stunned, his eyes fixed straight ahead. Hubbard asked if he was all right; he said no. Eventually, in a trance-like state, he peeled himself out of the courtroom and called his wife. She told him to meet her at Penn Station. As soon as they reached each other, Mike went limp and cried right there on the floor.
There’s a reason whistleblower claims so often end in defeat. Corporations have all the obvious advantages: more money, more lawyers. But, just as crucially, they control so many levers of power over their workers in the runup to trial.
The moment an employee presents himself as a potential threat, “you become a foreign organism,” says Richard Bowen, who was ousted from Citigroup in 2009 for warning about its shoddy mortgage practices. “The rest of the culture joins together to push you out.” When I walked Tales From the Boom-Boom Room author Susan Antilla through the details of Mike’s story, she interrupted me. “The case you’re talking about is unusual because it went to trial,” Antilla said. “There is no accountability.” (In fact, after seeing what happened to Mike, Rist came to an agreement with HSBC out of court.)
All too often, credible claims against banks are concealed through nondisclosure agreements and confidential settlements. Arbitration clauses in standard Wall Street employment contracts also force grievances into secret, extra-judicial tribunals, where the arbitrators are handpicked by employers. “For a half-century everyone in this industry went to arbitration for employment disputes,” Antilla explained. “They had decades to bury all their problems.”
And if an employee somehow musters up the money, energy and persistence to take a corporation to trial, he still faces terrible headwinds that his bosses have the ability to create. Of course someone stripped of all his responsibilities isn’t any good at his job. Of course someone suing the firm is looking for a payday. Of course someone ostracized by colleagues and supervisors is a conspiracy theorist who can’t be trusted. And it’s not as if people who still work at the company are eager to serve as character witnesses for their former colleagues. As Antilla put it, “Everyone has a mortgage.”
The power imbalance acts to protect the firm and its executives, and punish those who fight. “I tell my students, if you do whistleblowing, do so with the knowledge that you’re blowing up your career in every industry you’re in,” says Bowen, who is now an accounting lecturer at the University of Texas-Dallas.
This tradition of silence and futility helps explain why, for all of the training seminars and employee tiplines and initiatives to promote women, banking hasn’t experienced the reckoning that other professional fields have. “Wall Street has had absolutely no reform,” says Nancy Erika Smith, whose sexual harassment cases include clients from the banking industry. “It’s a macho frat boy culture to this day.”
The sense of impunity extends to other areas, too. After assisting drug cartels to launder cash, nobody at HSBC went to jail or had to fork over a dime of a Christmas bonus in penalties. By one estimate, the bank only had to pay about a month’s worth of profit to make the problem go away.
In 2012, the head of the Justice Department’s criminal division, Lanny Breuer, admitted that if the government pressed charges, HSBC would have “almost certainly” lost its banking license in the U.S. Then-Attorney General Eric Holder backed up his criminal chief in Senate testimony: “It does become difficult for us to prosecute when we are hit with indications that if we do ... bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy.” The phrase “too big to jail” was popularized around the time of those hearings.Over and over, Mike would talk about the injustice, the corruption, the damage done. “I saw what [HSBC] was all about. They are above the law in their own mind.”
HSBC spent five years under independent monitor Michael Cherkasky after the 2012 deferred prosecution agreement. His full reports were never released because the Justice Department worried that the unsealed documents might compromise future money-laundering investigations. But descriptions of key aspects of the report mirror Mike’s claims against HSBC: an inner circle determined to protect the bank at all costs and silence contrarians.
Cherkasky found that senior managers tried to bully internal watchdogs with a strategy he called “Discredit, Deny, Deflect and Delay.” According to a document signed by Loretta Lynch, the lead federal prosecutor on the case who would later become attorney general, Cherkasky singled out global banking and markets—the very division Mike worked in—for “combativeness, overblown complaints about factual inaccuracy, and a basic lack of cooperatives.” Employees in that division were pressured by bank executives like Suzy White to be “more favorable to the business than [they] would otherwise have been.” The head of global banking and markets was demoted after Cherkasky lambasted HSBC’s “deficient culture.”
Still, HSBC’s alleged misconduct continued apace. In Britain, HSBC is being scrutinized for running afoul of anti-money-laundering regulations. And in January, the bank entered into yet another deferred prosecution agreement with the Department of Justice, paying $100 million in penalties to resolve a currency rate rigging investigation. That ruling came on the heels of a $175 million fine levied in September 2017 by the Federal Reserve, which charged the bank with fostering “unsafe and unsound“ practices in one of its trading divisions. But even with all these new compliance issues, in December 2017, the U.S. government decided to close its investigation into HSBC’s anti-money-laundering policies, citing sufficient enough improvement. The biggest threat to the bank’s profits was gone. HSBC won, again.
I visited Mike last summer at his house in Melville, Long Island. It’s a modest two-story with a garage full of sports equipment. As he showed me around, two dogs bounded through the house and his four kids popped in and out between after-school activities. The only sign that his life had been interrupted was the sparsely decorated living room. Because of the lawsuit, he didn’t have enough money to fill it with furniture.
The panic attacks are gone now. After an excruciating two-year job hunt, during which he had to beg friends to give him a chance, Mike eventually found a position on the fringes of the finance industry. It doesn’t pay as well as his old one, but it’s enough.
And yet his hurt about what happened at HSBC remains very much on the surface. Over and over during our many conversations about the details of the case, he would get sidetracked, trailing off to talk about the injustice, the corruption, the damage done. “I saw what that place was all about,” he said once. “They are above the law in their own mind.”
Rob Sherman, the bank’s U.S. head of media relations, disagrees. “The jury’s unanimous verdict dismissing all of Mr. Picarella’s claims against HSBC, as well as the clear evidence presented at trial, demonstrate that HSBC took swift and direct action in dealing with the alleged harassment,” he told me. He then provided a link to HSBC’s official whistleblower policy, which “does not condone or tolerate any acts of retaliation.”
Last fall, Mike appealed the verdict, on his own, without an attorney. He also filed a formal grievance with the state Supreme Court against Randall Jackson for violating rules of professional conduct, supplying a spreadsheet with 126 examples of “lies, deceptions, and fabrications.” The pleas haven’t yet proved successful. The 2nd Circuit Court of Appeals ruled in favor of HSBC on January 31, arguing there was no “manifest injustice” in the jury verdict, and that Jackson did nothing improper. Mike filed another motion in February asking the judge in the case to throw out the verdict; late last month, the motion was denied. He’s currently suing his old lawyer, Jim Hubbard, for $10 million for malpractice, citing a failure to call key witnesses or make “appropriate objections” at trial, as well as a conflict of interest for also representing Jill. On Tuesday, Hubbard filed a motion to dismiss the charges.
I asked Mike why he has chosen to be so litigious, given how much pain the case still causes him. “They ruined my career,” he replied. “They put in the media, ‘lazy HSBC banker lost his case.’ They accused me of treason. They did it all purposely, intentionally, knowing that they can. I have to keep fighting for me and my family, and the next guy who wants to stick up for a lady that’s been sexually harassed.”
Late one afternoon, after hours of recounting his HSBC nightmare, Mike asked me if he could play the role of proud suburban dad for a moment. He pulled out a cellphone video of his twin daughters’ winter sports banquet and bragged about how the coach praised their discipline and determination. He then told me that the twins planned to attend the University of Southern California in the fall.
USC is one of the most expensive schools in the country, and Mike and his wife weren’t quite sure how they were going to pay for it. Maybe they’d have to take out a second mortgage, or he’d have to pick up a second job. But he was determined to make it work.
“I’m not going to let HSBC harm my family’s dreams,” he said, growing more emphatic as he spoke. “I will do anything so they can go to the school they want. They worked hard for it, and HSBC isn’t going to take that away from us. Pardon my language, but fuck them.”