A hedge fund run by Alphonse “Buddy” Fletcher, Jr. filed for bankruptcy last Friday as a legal manoeuvre in a battle with Louisiana pension funds who say they were treated dishonestly as investors, the Wall Street Journal reports.The move caught the attention of Fortune writer Dan Primack because Fletcher is married to Ellen Pao, a partner at Kleiner Perkins who is suing the firm for gender discrimination and retaliation.
And people we’ve spoken to who favour Kleiner’s version of events point to the possibility that Fletcher and Pao are having money problems as a possible motivation for her lawsuit.
As we previously reported, Pao’s suit is pretty unusual, from her disclosure of an affair with a married partner (before she married Fletcher, who was previously involved in a long-term relationship with a man who’s known as the godfather of Pao and Fletcher’s child); to an erotic poetry book given to Pao as a gift by another married partner; to claims of a stolen board seat.
But the weirdest thing is that it’s happening at all.
The world of venture capital is intensely secretive and these kinds of disputes normally get quietly settled.
As Primack points out, Pao and Kleiner disagree substantially on what really happened. Pao describes meetings and conversations that Kleiner says never happened. So someone’s not telling the truth.
Fletcher has some history of discrimination lawsuits. He sued and won in a discrimination case against a brokerage firm he worked at. He’s embroiled in a lawsuit against the Dakota co-op building’s board, which denied him the right to buy a fifth apartment, citing concerns about his ability to afford it.
Pao and Fletcher also sold their condo in San Francisco’s St. Regis tower earlier this year, at a small loss—which certainly looks like a move to raise cash.
And Pao continues to show up for work at Kleiner Perkins, which helps buttress her legal position (California law sets a higher bar for employees who quit and sue for discrimination) but also lets her keep a steady paycheck.
But here’s a big flaw in the hypothesis that Pao is suing Kleiner because she’s under short-term financial pressure. Lawyers cost money. Pao has hired Alan Exelrod, long recognised as one of the best employment lawyers in northern California. If she needed to raise cash to shore up her family’s finances, wouldn’t she have taken a deal by now?