Institutional investors with positions in OrbiMed are reportedly reviewing their involvement with the healthcare hedge fund after sexual harassment allegations surfaced against founder and managing partner Sam Isaly.
Six former employees of biotech hedge fund accused Isaly, a 72-year-old investor long revered in the biotech community for his ability to pick stocks, of routinely demeaning and harassing women with hardcore pornography and sex toys, STAT reported Dec. 5. Isaly has denied the allegations. The sixth accuser contacted the outlet after that story, requesting anonymity for fear of reprisal by the hedge fund.
The story roiled Wall Street, prompting investment firm Eaton Vance to review its arrangement with OrbiMed, which provides it with investment advice, according to STAT.
“We were not aware of any of these allegations, which we take very seriously,” an Eaton Vance spokesperson told the outlet via email. “We are reviewing the matter now.”
OrbiMed’s code of ethics requires 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,” Eaton Vance said in a regulatory filing, according to STAT.
Another large investor, the CalPERS California public pension fund, also invests in OrbiMed via an externally managed “fund of funds.” CalPERS told the site that it plans to alert its manager on the matter.
“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 told the site.
OrbiMed said it’s hired an independent law firm to investigate the allegations but did not respond to requests for comment, STAT reported.
The story is closely followed in the financial circles in the U.K., where Isaly manages the $1.2 billion Worldwide Healthcare Trust. Although a representative declined to comment, the fund said yesterday acknowledged the scandal and said it would “keep shareholders informed of any relevant developments.” The British fund’s website prominently features a video of Isaly touting his firm’s healthcare investing acumen.
Isaly was scrubbed from the speaker list at an upcoming CNBC heathcare conference, where he was billed as “one of the world’s most recognized healthcare fund managers.” The television network declined to comment to STAT. He also skipped an investor event in New York City last night, the site reported, citing an attendee at the Evercore ISI event.
Isaly’s former assistant, Delilah Burke told STAT that he repeatedly showed her hardcore pornography just to laugh as she reacted in disgust.
“I’m scarred,” Burke said. “I still have anxiety from that job — now, years later.”
In August of 2010, Isaly allegedly summoned Burke into his office and asked her to get a file from his briefcase. She opened the briefcase only to find a flesh-colored vibrator, Burke told STAT. Isaly laughed at her reaction, but for Burke it was the last straw.
“The vibrator thing is when I quit,” Burke said. “It was just, ‘You’re disgusting. I’m leaving. This is it.’”
Of the five original accusers, four said they repeatedly complained about Isaly’s behavior to OrbiMed executives, who expressed sympathy but did not pursue the matter. Four of the five former OrbiMed employees spoke on condition of anonymity, citing non-disclosure agreements and a fear of retaliation. Burke reportedly received a printed copy of her non-disclosure agreement last week with a letter reminding her of what she signed.
The sixth accuser contacted the website yesterday after reading the site’s first scoop on Isaly to corroborate the account’s original five accusers.
None of the accusers said Isaly touched them in a sexual way. Instead, he promoted and took part in a toxic culture of sexually-charged jokes that made some of his female colleagues uncomfortable, they alleged.
The firm brushed off some of the allegations, including one that Isaly kept a set of breast implants on his desk and would touch them during conversations with employees. Those devices, OrbiMed said, were keepsakes from the firm’s investment in Sientra (NSDQ:SIEN).