Sallie Krawcheck
Chair of Ellevate Network and Ellevate Asset Management
Weeks after Sallie took over running Merrill Lynch’s wealth management division,
in the fall of 2009, she was told that the Stable Value Fund, a financial product
Merrill had sold in 401k plans, wasn’t actually so stable. The team had "messed
up," says Sallie. They had "managed the money in a way that something that was supposed to
be low risk and maintain its value had lost value."
Even worse, the people who would suffer most from the mistakes were low-income earners
who invested in the funds as part of their retirement savings plans—specifically, Walmart
employees, as the retail giant was the biggest owner of these funds.
"There were two options, one of which was to say tough luck to the Walmart employees who
owned the Stable Value Fund," says Sallie. "Or to put money in, in order to increase the [fund's]
value."
Sallie, who had just been fired as head of CitiGroup’s wealth management division for
reimbursing clients for their losses, quickly felt a sense of déjà vu in her new role.
"I’d lost my job once for doing this . . . did I want to do it again?" she recalls. "And the answer is,
I did."
She adds: "It wasn’t a lot of sleepless nights. In a way, I had set precedent for myself on this. I
set precedent at [Smith] Barney’s that I was willing to lose my job for it."
I'd lost my job once for doing this . . . did I want to do it again? The answer is, I did.
When Sallie came forward with her suggestions, there was a lot of back and forth because "the
banks didn’t have lots of money at the time," she says. "What I will say is that Ken Lewis, who
was the CEO at the time, did support us in making what I thought was the right decision. I didn’t
get fired from it. In fact, you’d never even read about it until today."
Her advice: "We all have to find that line for ourselves and examine the downside. Are you
comfortable with the downside? I didn’t love the idea of losing my job, but that was less painful
7 Business Leaders share how they solved
the Biggest Ethical (Moral) Dilemmas of their careers
Vivian Giang 06.02.15 5:51 AMMGMT 3035- Business Ethics PAGE 14
to me than thinking about telling the Walmart employees that we had lost money that they had
thought could not be lost."
The lesson: "Know what your indicator is. My indicator has always been my stomach. When my
stomach starts to hurt, I know that something’s wrong
Identify
- The Ethical Issue the leader faced
