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Wexner, L Brands Board Sued for Epstein Ties, Harassment Culture

Jan. 13, 2021, 6:04 PM

Leslie H. Wexner and other longtime senior leaders at L Brands Inc. were hit with a shareholder lawsuit in Delaware over the Victoria’s Secret parent’s “entrenched culture of misogyny, bullying and harassment, as well as ties to Jeffrey Epstein and other egregious mismanagement.”

The board “did nothing” to address decades of sexual harassment by top L Brands executives, while the underqualified Epstein inexplicably managed Wexner’s fortune—and while the billionaire sex offender apparently used Wexner’s home “for liaisons with victims,” the suit says.

Epstein victim Virginia Giuffre has also “claimed that he directed her to have sex with Mr. Wexner,” and another victim has accused Wexner’s wife, Abigail, “of acquiescence while Epstein and Ghislaine Maxwell sexually assaulted her” at the couple’s home, according to the complaint filed Tuesday.

L Brands didn’t immediately respond to a request for comment Tuesday or provide contact information for Wexner, who stepped down as CEO and chairman in May.

The derivative suit, filed in Delaware Chancery Court, largely concerns accounts that longtime former L Brands marketing chief Edward Razek—who’s also named as a defendant—spent years harassing women throughout the company, including both fashion models and senior executives.

When the misconduct was reported to Wexner and the board, they quietly settled with the alleged victims and had them sign nondisclosure agreements, according to the complaint.

“Notwithstanding the numerous complaints” to human resources, neither “Wexner nor any member of the board (including the purportedly ‘independent’ directors) took action to protect the company’s employees” or seek damages from Razek, the suit says.

It cites reports of an extramarital affair between an employee and longtime chief financial officer Stuart Burgdoerfer that “spread through the company,” damaging morale. Former top executive Charles McGuigan had a relationship with an employee while he was head of human resources, according to the complaint.

The suit also accuses the Wexners of giving Epstein “access to the company’s facilities, assets, and personnel.”

“Mr. Wexner knew or should have known that Epstein was using his relationship with the Wexners” to “recruit aspiring models,” the complaint says.

It also links the misconduct allegations to the collapse of a transaction that would have seen private equity firm Sycamore Partners buy a majority stake in Victoria’s Secret for $525 million.

After the sale broke down over the Covid-19 pandemic, the parties sued each other in Delaware—Sycamore seeking to exit the deal, L Brands trying to close it by court order—but ultimately agreed to simply walk away from the agreement.

L Brands may have opted not to seek a breakup fee from Sycamore, despite having the stronger litigation position, because the private equity firm used the misconduct allegations “as leverage,” the suit says.

Its claims echo a records inspection lawsuit that a different shareholder filed against L Brands in June and dropped in November.

Cause of Action: Breach of fiduciary duty; corporate waste.

Relief: Damages, costs, and fees.

Attorneys: The plaintiff, an investment trust holding L Brands shares, is represented by deLeeuw Law LLC and Greenfield & Goodman LLC.

The case is Lambrecht v. Wexner, Del. Ch., No. 2021-0029, complaint filed 1/13/21.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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