Square's Keith Rabois Resigns Amid Sexual-Harassment Claims - WSJ.com

Square Inc. said Chief Operating Officer Keith Rabois resigned from the mobile-payments company because of accusations from a Square employee of sexual harassment.

Square on Friday said a New York attorney, Steven Berger, who represents a Square employee, reached out to the San Francisco-based company two weeks ago, alleging that Mr. Rabois had sexually harassed the employee and that Square was aware and failed to take appropriate action.

Bloomberg

Keith Rabois, seen here in 2010, resigned from Square amid sexual-harassment accusations. Mr. Rabois denied the allegations.

Mr. Berger didn't respond to requests for comment. Square declined to identify the employee who brought the allegations against Mr. Rabois.

In an interview, Mr. Rabois, 43 years old, denied the allegations and said, "I'm completely confident that all the facts will come out and I will be vindicated."

Square said it retained attorney Richard J. Curiale when it learned about the accusation to look into the matter. Square's chief executive and co-founder, Jack Dorsey, was briefed by Square's attorneys on the situation, along with Mr. Rabois. Mr. Curiale said he spent several hours with Mr. Rabois and other Square executives, and reviewed texts and emails provided by Mr. Berger. According to Mr. Rabois, he wasn't aware of any sexual-harassment issues at Square, involving him or other employees, until then.

Mr. Rabois said he had an intimate relationship with an employee that started several months before the employee joined Square. Mr. Rabois acknowledged that he didn't disclose the relationship to Square.

"Several months after our relationship began, I recommended that he interview at Square," said Mr. Rabois in a statement. "He went through the interview process and was ultimately hired. I did not interview him....At no point did he ever report directly to me, and I have seen his work product less than a handful of times."

According to Rabois, he exchanged many texts and emails with the employee, though he described them as welcome.

Mr. Rabois said he resigned in order to not cause a distraction for the company. He added in a statement, "I deeply regret that I let my personal and professional lives to become intertwined."

No lawsuit has been filed against Mr. Rabois or Square, said Mr. Curiale.

"While we have not found evidence to support any claims, Keith exercised poor judgment that ultimately undermined his ability to remain an effective leader at Square. We accepted his resignation," said Square spokesman Ricardo Reyes in a statement.

Mr. Rabois, a former executive of tech companies including PayPal and LinkedIn Corp., is a high-profile Silicon Valley figure who is considered part of what many techies call the "PayPal Mafia," a group of early PayPal employees who have since gone on to invest and create a number of Silicon Valley startups.

His abrupt departure comes at an awkward time for Square, which recently raised a large financing round at a $3.25 billion valuation and is working on growing to better compete with larger rivals, such as Google Inc. and eBay Inc.

While Mr. Dorsey has focused on the design of the company's products, including its signature square-shaped credit-card processor, Mr. Rabois has been focused on running other parts of the business, such as marketing and business development. Mr. Rabois, who joined the company in mid-2010, helped build Square from 17 employees to more than 400.

Square last June hired Sarah Friar, a former executive of Salesforce.com, to be its chief financial officer. With Mr. Rabois's departure, Ms. Friar will be acting chief operating officer, the company said.

Write to Evelyn M. Rusli at evelyn.rusli@wsj.com