Leslie H. Wexner may be in the hot seat again.
A new complaint, filed Tuesday in the Court of Chancery in the state of Delaware, accuses the founder and chairman emeritus of L Brands, parent company to the Victoria’s Secret and Bath & Body Works brands, along with other members of the L Brands’ board, both past and present, of fostering an “entrenched culture of misogyny, bullying and harassment” at the lingerie brand.
In question is Wexner’s relationship with former confidant and sex offender Jeffrey Epstein, who controlled much of Wexner’s fortune for years, including being named trustee of the Wexner Foundation. Many believed Epstein was using his close ties to Wexner and Victoria’s Secret to seduce young women, although Wexner was quick to distance himself from the disgraced financier after Epstein was arrested on sex trafficking charges in July 2019. (Epstein died of an apparent suicide a month later while in jail.)
Wexner said he had cut ties with Epstein years earlier, after discovering that Epstein was embezzling money.
But the new complaint claims that “Mr. Wexner knew or should have known that Epstein was using his relationship with the Wexners and to the company to recruit aspiring models by posing as a recruiter and lying to them about his ability to get them Victoria’s Secret assignments.”
Other members of the board, including Wexner’s wife, Abigail, were also believed to have known about misconduct within the company.
“The Wexners let Epstein use their home for liaisons with victims,” the court documents read. “Another [Epstein] victim, Maria Farmer, has accused Abigail Wexner of acquiescence while Epstein and [girlfriend] Ghislaine Maxwell sexually assaulted her in the New Albany, [Ohio] compound and, effectively imprisoned her there and kept her under security guard.”
In addition, the complaint alleges the company did little to address complaints made against former L Brands chief marketing officer Ed Razek prior to his departure from the company in August 2019.
“Notwithstanding the numerous complaints made to the company’s human resources department about defendant Razek’s widely known misconduct, neither defendant Leslie Wexner nor any member of the board (including the purportedly “independent” directors) took action to protect the company’s employees or seek recovery of L Brands’ damages from defendant Razek,” the documents read.
Furthermore, the complaint says “each of the defendants breached his or her fiduciary duty to the company by acting and/or failing to act,” causing financial damage to the company and shareholders.
“Each individual defendant, as a director and/or officer of L Brands, had an obligation to take reasonable steps to investigate and, if appropriate, assert any and all valid claims and causes of action the company may have,” the documents read.
Current L Brands chairperson Sarah E. Nash was also named in the complaint.
According to the court documents, shareholders had previously asked L Brands to investigate matters of misconduct within the company back in July 2020. Three months later, L Brands responded by way of its lawyers Wachtell, Lipton, Rosen & Katz, saying it had formed a special committee to look into the matter.
“Not surprisingly, that ‘investigation’ yielded no results,” the documents said.
Shareholders are asking L Brands for damages, including attorney costs and other expenses.
L Brands declined to comment.
Meanwhile, Victoria’s Secret continues to show progress in its turnaround efforts. After a better-than-expected holiday season, shares of L Brands are up approximately 128 percent, year-over-year.
The innerwear giant has also added a string of senior-level hires over the last few months to help turn the brand around, updated the assortment and marketing materials, sold a majority stake of the Victoria’s Secret U.K. business to Next plc and closed hundreds of unprofitable stores to make way for more lucrative markets, such as Milan and Israel.
In addition, L Brands has trimmed about $400 million in expenses by reducing the corporate head count and revealed plans to separate Victoria’s Secret into a private company, helping unlock value from the Bath & Body Works brand. It has yet to release a firm date for the spin-off.