Carta, previously sued for gender discrimination, is now suing its former CTO

Carta, the 11-year-old, San Francisco-based outfit whose core business is selling software to investors to track their portfolios, has sued its former CTO, Jerry Talton, who the company says was fired “for cause” almost three weeks ago, on Friday, December 23.

In its lawsuit, Carta is suing Talton for damages, citing “his wrongful and illegal acts as an executive of Carta” and suggesting he both betrayed the company and sexually harassed its employees despite being given a role that came with “hundreds of thousands of dollars in salary and benefits, and substantial equity awards.”

On first read, it sounds like a company throwing the kitchen sink at a would-be whistleblower whose tactics were ham-handed (and illegal, says Carta).

Specifically, according to the complaint, Talton was put on administrative leave in October of last year after submitting a letter to Carta’s board of directors, flagging various “problems” with the company’s culture.

Carta says Talton’s leave was meant to enable the board to “facilitate” an “independent” investigation, but that during that period, the company discovered that Talton had preserved audio recordings of workplace-video meetings with Carta’s general counsel without her knowledge. How? According to the complaint: “[D]uring a confidential mediation involving a female former Carta employee (a mediation to which Talton was not a party), on November 8, 2022, Carta’s General Counsel April Lindauer was copied on an email from Talton to that former employee and her counsel, seemingly by mistake, stating ‘I think you should read the whole thing’ and including a transcript of an audio recording between Talton and Lindauer from September 27, 2022. The email also included an indication that the audio recording was uploaded to the file-sharing platform, DropBox.”

Oops.

The company says it subsequently demanded that Talton return all recordings and transcripts and other Carta property to Carta and that he also provide copies of all recordings and transcripts to “company-authorized investigators.”

Talton, who Carta believes “also surreptitiously recorded at least two members of Carta’s Board of Directors, as well as Carta’s Founder and CEO, and other Carta executives and employees,” said no.

We reached out to both Carta and Talton earlier this evening for comment; neither had responded as of our publication time.

A spokesperson separately told the San Francisco Business Times that Carta cofounder and CEO Henry Ward is serving as interim CTO until the position is filled.

The lawsuit appears likely to damage both parties.

Toward the end of Carta’s long list of accusations against Talton, Carta says that Talton both sent and received “sexually explicit, offensive, discriminatory and harassing messages with at least nine women including during work hours and on Carta’s systems,” and that Talton sought and obtained “benefits and privileges to which he was not entitled, including without limitation, misuse of his corporate credit card for personal matters, and repeated attempts to book travel outside of company policy.”

Before Carta, Talton — who has a PhD in computer science from Stanford and two degrees from the University of Illinois at Urbana-Champaign — spent a year-and-a-half as an engineering manager at Slack. He also co-founded a since-shuttered software startup that was seed funded by NEA and Andreessen Horowitz, and spent two years as a research scientist at Intel, according to LinkedIn.

He joined Carta as a director of engineering in 2018 and was promoted to CTO in 2020.

Carta meanwhile has previously been flagged for having a”culture” problem. In 2020, the company’s former VP of marketing sued Carta, accusing the outfit of gender discrimination, retaliation, wrongful termination and of violating the California Equal Pay Act. (We featured that case here.) Soon after, four employees spoke on the record with the New York Times, telling the outlet that when they voiced concerns about the way the company is run, they were sidelined, demoted or given pay cuts.

The problem appears to extend to the company’s treatment of some of its customers. Several who TechCrunch interviewed over the last couple of months have expressed dissatisfaction with Carta and the service they have received from its representatives. One, a fund manager who is in the midst of transitioning off the platform currently, told this editor last week that his team had “four different account managers in the less than a two-year engagement at Carta; it certainly didn’t help with continuity and understanding of our fund and needs.”

A separate fund manager who we interviewed last week complained of a “lack of communication internally,” saying that it’s “like working with four service providers.” Carta will “ask you for a document that they have on file and should know that they have on file,” she said. “I shouldn’t have to keep track; that’s why I’m paying for fund administration. They’ll tell you to check out ‘the portal’ and the portal is terrible.”

It’s “miserable,” this person added. “It’s like a tech-first solution to a service industry and I think they need an awakening.”

Carta has roughly 2,000 employees, judging by its LinkedIn profile, though that number is presumably lower in reality. Carta laid off 16% of its employees during the height of the pandemic; last month, according to a conversation posted to the anonymous professional network Blind, Ward told employees that another layoff was in the works.

Carta has raised $1.1 billion altogether from investors, according to Crunchbase. It announced its eighth and most recent round of funding in August 2021: a $500 million Series G that was led by Silver Lake and valued the company at $7.4 billion.

In addition to Silver Lake, some of its biggest backers include Spark Capital, Social Capital, Menlo Ventures and Andreessen Horowitz.

Pictured above: Carta cofounder and CEO Henry Ward; he incubated the company, originally called eShares, with serial entrepreneur and longtime investor Manu Kumar.