JK rolling

9 February 2016 By Robert Cyran Follow @rob_cyran

Bad practices led to CEO departures at Blackstone-backed mall owner Brixmor and HR software unicorn Zenefits. It’s a useful reminder of a Depression-era observation that good times mask bad behavior, but hard times expose it. These examples may be just a taste of what’s to come.

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Zenefits, a human resources software provider and insurance broker, said on Feb. 8 that it had replaced founder and Chief Executive Parker Conrad with Chief Operating Officer David Sacks.

The company, valued at $4.5 billion in its last funding round, is under investigation in Washington state for allegations it let unlicensed brokers sell healthcare coverage.

In a letter to employees, Conrad said, “We sell insurance in a highly regulated industry. In order to do that, we must be properly licensed. For us, compliance is like oxygen. Without it, we die. The fact is that many of our internal processes, controls, and actions around compliance have been inadequate, and some decisions have just been plain wrong.”

Separately, shopping center owner and operator Brixmor Property Group said on Feb. 8 that its chief executive, chief financial officer and chief accounting officer resigned after an internal review found its financial statements had been tampered with to show consistent growth in same-property operating income.

Brixmor said it would not have to restate its results, as the errors were not material.

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