Is Sage Kelly the new normal for Wall Street divorces?

by Lawrence DelevingneDecember 22, 2014

The coda to the Sage Kelly divorce scandal came on Dec. 17, when the elite Jefferies investment banker resigned to “focus on family matters.”

The departure followed two months of intense scrutiny prompted by a salacious legal filing from his wife, Christina Di Mauro Kelly, that included allegations of cocaine and mushroom use, a four-person orgy involving a client and anecdotes of questionable parenting. She demanded $7 million and joint custody of their two children. The details were so juicy that it prompted international media coverage, moved two related-biotech stocks, and led to an impromptu urine test by top Jefferies executives.

Then, in a surprising about-face, Christina issued apology for the mess from “inaccurate, untrue or hyperbolic” media coverage. She called Sage, who had strongly denied the allegations, a “great father” as the two former spouses settled their case for an undisclosed amount and joint custody of their daughters—an apparent victory for Christina.

The Kelly saga is just one of many recent Wall Street breakups to play out in public.

Anne Dias Griffin noted in a legal document that her husband, billionaire hedge fund manager Ken Griffin, had forced her into a prenuptial agreement and, after breaking up, locked her out of family homes and even said he would demolish part of one. The Chicago press led the charge on the wealthiest man in Illinois.

Katherine Nelson wrote in a lawsuit that her alleged philandering lover, insurance executive Robert Rosenkranz, had promised her $100,000 to not speak of their supposed affair (Rosenkranz is still married). Again, the New York Post and others jumped in, soon leading to breathless spreads in the U.K. tabloids.

And professional investor Brad Zipper slapped his much-younger girlfriend Nicole Raef with a restraining order as the couple broke up. Zipper later explained in court he had trouble leaving her in the past because of makeup sex, as reported inthePost.

Is a nasty split in scorching public view the new normal for Wall Street power couples?

Some divorce lawyers think so.

“Lawyers have figured out that they can use and manipulate the media,” matrimonial attorney Sy Reisman said.

“The Wall Street guys are targets, no question about it,” added Reisman, citing the Kelly divorce as a prime example. “They have more money and they want to be private. … They don’t want their personal lives in the press.”

Divorce lawyer Suzanne Bracker said going to the press on behalf of a client is more common.

“Nowadays everyone is doing it and there is no more shame,” Bracker said. “Whatever’s good for your client is something that you’re going to advocate.”

Jacqueline Newman, another divorce lawyer who works with financial industry clients, said the threat of going to the press has always existed but more are using the media as part of their battle tactics to force a settlement.

“People are caving less and less and therefore people are making good on their threats,” Newman said. “Now that one or two people broke the seal, it’s becoming easier to write these types of stories.”

Indeed, the stories are often irresistible to the media.

Brett Kimmel, an attorney representing Raef against Zipper, said the lurid details easily attract attention.

“People love reading about the intimate details of other people’s lives. You’ve got a pretty young girl, a rich older guy. And this is like a soap opera,” Kimmel said.

“Money, sex, drugs, betrayal, domestic abuse and dirty low-down tricks all playing out in a public courtroom,” Kimmel added. “Each day of the trial brings a new installment.”

Zipper admitted in court that the pair used illegal drugs together, according to the Postand Raef claimed Zipper forced prescription drugs on her, a claim he denied.

Marcy Katz, an attorney for Zipper, declined to comment, but said in court that Raef has attempted to use the courts and the media for her own financial gain.

Spokesmen or attorneys for Christina Kelly, Sage Kelly and Nelson did not respond to requests for comment. Representatives for Rosenkranz, Griffin and Dias-Griffin declined to comment.

“Tabloidization” of American life

The public Wall Street breakup fits into a broader trend of people sharing more.

“Personal lives are increasingly being played out in public—think ‘Real Housewives’ and Facebook—and this is just part of that trend,” said Melissa Fisher, a cultural anthropologist at New York University and author of “Wall Street Women.”

Fisher said that the press also likes the stories because they play into preconceived notions of financial professionals.

“Wall Street is typically seen as having a uber-masculine culture and the press likes situations that fit the stereotype,” she said. “There’s been a lot more demonization of excessive risk taking after the financial crisis. These cases are often about very competitive men thinking they can get away with anything. Society likes to shame that.”

Stephanie Coontz, a professor of history and family studies at Evergreen State College, called it the “tabloidization” of American life.

“[It’s the] growing willingness of people at every income level to take their private lives and personal disputes public,” Coontz said.

The documents related to divorce proceedings are sealed in states like New York, meaning there is no public access to them. But divorce attorneys said it is technically legal for one of the parties involved to give materials or information to a reporter. Such leaks, they say, are only done with the consent of a client and when there’s no judge-imposed gag-order.

Nothing new

Others aren’t convinced the nature of Wall Street divorces is changing.

“This is nothing new. The threat of going to the press has always been there,” said attorney Jad Greifer. “Maybe now it just disseminates a little further and faster, but this is not a big new trend.”

Regardless of how prevalent the tactic will be, there are big risks to going public.

“Going to the press can have major collateral damage, both professionally to the parties and, more importantly, to their children,” Greifer said.

“The bad behavior and public accusations we see in some of these cases may serve the spouses’ anger, but it does not serve their long-term interests,” Coontz said. “Even when one partner initially wins the kids to their side, in the long run the kids are more likely to distance themselves from both parents.”

To be sure, the media often pick up on stories against the wishes of the parties involved. Most would rather stay out of the press altogether.

“It’s certainly a concern for many in finance, who are otherwise relatively anonymous, to … suddenly have their private lives splashed all over the media, with all the voyeurism that goes along with it,” Greifer said. “It’s a tough thing to go through, and most would rather not.”

Some lawyers said it was foolish to go to the media with details of misbehavior because it can cut into their former partners’ earning potential.

“You never kill the goose that lays the golden egg. It’s a stupid thing to do,” said Bracker.

Wall Street not alone

Public financial industry breakups are happening abroad, too.

Billionaire U.K. hedge fund manager Chris Hohn has been in a highly visible divorce proceeding with his American wife, Jamie Cooper-Hohn. Fellow London-based fund boss Pierre Lagrange faced a similar spotlight when he amicably broke up with his wife in 2011 to be with his boyfriend, Roubi L’Roubi. And investment pro Lena Tan has been in a contentious and public divorce with her former banker husband Weng Choy in Malaysia and London.

The world of finance, of course, isn’t the only community to have breakups play out in the press. Entertainers and politicians have long seen their private lives become tabloid fodder. Corporate executives can also come under the media’s glare, such as the ongoing divorce of energy billionaire Harold Hamm or Johnson Controls CEO Alex Molinaroli, who had his bonus cut after an affair.

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