Published on 09 September 2018



Despite being accused of numerous rapes and sexual assault, producer Harvey Weinstein is being named after a new legal provision called, the "Weinstein Clause". Having recently been introduced in several corporate purchase contracts, the clause guarantees investors that the company in question is not involved in any sex scandals. This is seen as a way to safeguard against financial risks.

A new clause, inspired by the Weinstein case, has recently appeared in business contracts.

The #MeToo movement has caused repercussions, even on Wall Street. According to Bloomberg news agency, a new clause has recently appeared in business contracts. Its name? The "Weinstein Clause", after the producer accused of rape and sexual assault by multiple actresses. Having already been charged with rape, Weinstein could soon be sued for sex trafficking by British actress Kadian Noble.

A safeguard against sex scandals

To safeguard against such scandals in a company acquisition, Wall Street financial advisers and lawyers have introduced a clause that guarantees the buyer that no sex scandal affects the company concerned. "There have not been any Actions pending or, to the Company’s Knowledge, threatened, against the Company, in each case, involving allegations of sexual harassment by any member of the Senior Management Team or…employee in a managerial or executive position", states Del Frisco's Restaurant Group in a recent contract, after being acquired in June.

In total, Bloomberg has counted seven takeovers having introduced such a clause. Gregory Bedrosian, CEO of investment bank Drake Star Partners, told Bloomberg that it has introduced this clause in several of its contracts. In some cases, this clause may allow investors to recover some, or all, of the money paid out if a sex scandal arose in the acquired company.

Sexual harassment: a financial risk

This clause echoes other initiatives taken in recent months by the finance world. In June, the giant American pension fund Calpers, which manages $355 billion in assets, asked management companies to disclose ongoing and past harassment cases.

The Los Angeles County Employees Retirement Association (LACERA), which manages $56 billion, has added sexual harassment risk to its management contracts. It’s clear: sexual violence is becoming a financial risk for businesses.

Marina Fabre

© 2021 Novethic - Tous droits réservés

‹‹ Retour à la liste des articles