Sex, Lies, and the Internet: The Downfall of a Banker

Last week, Credit Suisse announced the resignation of Steven Rattner, a managing director and the head of its private equity arm, DLJ Merchant Banking.

Wall Street
Wall Street

As is the custom on Wall Street, a spokeswoman for Credit Suisse said Mr. Rattner was leaving of his own volition to “spend more time with his family.” (This Steven Rattner is not to be confused with the other, more prominent Steven Rattner, who founded the Quadrangle Group and manages Mayor Michael Bloomberg’s blind trust.)

But the real reason for Mr. Rattner’s departure, which had been whispered across Wall Street for weeks and around his hometown, Rye, N.Y., after it was circulated as part of a vendetta on the Internet, was much more complicated, painful and personal. It is a cautionary tale about the fragility of reputation on Wall Street and elsewhere.

I’ll leave out the tawdriest details, but here is the general outline: Five years ago, Mr. Rattner was involved in an affair with a married woman in London. Eventually, he cut off the romance, confessed to his wife and subsequently worked hard to repair his marriage. During the time of the affair and its aftermath, no one at Credit Suisse complained about his job performance — nor have they since. He was a rising star.

In other words, this ought to be a story that, while painful, remained private. Instead, it’s just the opposite, having already played out widely on the Internet.

Kelly Cosgrove, the woman with whom Mr. Rattner had an affair, was married at the time to an Australian named Tommii Cosgrove. And after he learned of the affair, Mr. Cosgrove decided to make it his life’s mission to damage Mr. Rattner. And with Mr. Rattner’s resignation, he may have succeeded.

Mr. Rattner, who is apologetic and contrite, did not commit a crime. He did not violate Credit Suisse’s code of ethics. His affair was not with a subordinate or a peer — Ms. Cosgrove had no relationship with Credit Suisse.

Here is one of the bizarre facts about the case: Although Mr. Cosgrove has known about the affair for five years — indeed although the Cosgroves were divorced last year — he began his vendetta only two months ago. When I asked him about the strange five-year gap, Mr. Cosgrove said, “I had to put my life back together again. He destroyed everything I had. And I had to find him.”

Find him Mr. Cosgrove did. On a half-dozen Web sites, and in a series of incendiary e-mail messages to Mr. Rattner’s colleagues and clients, as well as reporters, Mr. Cosgrove accused Mr. Rattner of trying, essentially, to steal his wife. He spins an elaborate tale, comparing Mr. Rattner to Richard Gere in the movie “Pretty Woman,” and his own wife to Julia Roberts. He contends that Mr. Rattner also took his wife to Macao, Hong Kong, the Philippines, France and Monaco, and showered her with exotic gifts, jewelry and designer clothes.

When I spoke to Mr. Rattner, he forthrightly and apologetically acknowledged the affair.

He said it was not something he was proud of and was shell-shocked about what has happened. But he said that most everything Mr. Cosgrove claims is either untrue or a gross exaggeration. “I feel like the star of a bad made-for-TV movie,” he added.

To be honest, it’s hard to read Mr. Cosgrove’s florid account without concluding that he has, at a minimum, a vivid imagination. In one of my conversations with him, he alleged that he had “threats on my life by underworld associates;” that he was living in his car for a while; and that Mr. Rattner had been willing to pay him, through his ex-wife, $70,000 to disappear.

Mr. Rattner agreed to speak with me Monday because “the damage is done. Everyone has heard.”

He added, “I love my wife and my kids more than life itself.” But he also said he was willing to be interviewed for this column because it offered a cautionary lesson. Once Mr. Cosgrove pushed his allegations to the Internet, Mr. Rattner said, there was nothing he could do to stop it. “It’s just amazing to me,” he said, describing Mr. Cosgrove’s persistence as “viral.” “And there is no way to fight back.”

Asked whether he was happy that Mr. Rattner resigned from his job, Mr. Cosgrove, reached on his mobile telephone Monday, said, “He should have thought about that before he did what he did to me.” Moments later, Mr. Cosgrove claimed he didn’t even know Mr. Rattner, which didn’t exactly heighten confidence in his accusations.

Nonetheless, with DLJ Merchant Banking planning to raise a new investment fund, and the rumor mill still swirling about Mr. Rattner, and continually stirred up by Mr. Cosgrove, some of the firm’s partners were worried that Mr. Rattner was becoming a liability, said people at the firm who declined to be named because of the sensitivity of the matter.

Mr. Rattner, too, recognized the dilemma DLJ Merchant Banking was facing because of Mr. Cosgrove’s vendetta, and the personal toll it was taking on Mr. Rattner’s family. Mr. Rattner said it was “more important to spend time with my family” than “100 nights a year away from them traveling.”

The two sides said they parted ways amicably.

It may seem to be a paradox that Mr. Rattner is out of a job, because on Wall Street, the stereotype is that everyone is having an extramarital affair, wining and dining at fancy hotels on the company’s tab.

When Tom Hudson, the founder of Pirate Capital, was famously fired from Goldman Sachs in 1999 for a dalliance with a 24-year-old trading assistant (whom he would marry and later divorce), he sued the firm, contending in his complaint that he “believed that numerous high-ranking Goldman Sachs partners and employees had engaged in extramarital sexual relations with other Goldman Sachs employees and that such relationships, widely known at the firm, had not hindered the careers of such partners and employees.” The case was thrown out.

But this isn’t about a man who made a mistake and had an affair. It is a story about a man who said he was helpless against the destruction that can be wrought by aggressive campaigns on the Internet.

Even the other, more prominent Mr. Rattner has learned that through this tale. “I’ve gotten people calling up in a panic,” he said. “I had to tell them it wasn’t me.”