Redeem now - The suit is the latest salvo in an ongoing legal battle between Carta and its former CTO Jerry Talton.
- It comes just days after Carta shuttered its secondary trading business following allegations it misused customer data.
- In his lawsuit, Talton alleges whistleblower retaliation, business misconduct, and defamation.
A new front opened today in Carta's ongoing legal battle with a former executive over damaging recordings of CEO Henry Ward and others.
This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in.Jerry Talton, the company's former chief technical officer, filed a lawsuit today today in the Southern District of New York alleging he was retaliated against by Ward for raising concerns about misconduct and was subsequently publicly defamed.
In the lawsuit, Talton says Ward "combines the ego and volatility of an Elon Musk, the effortless dissembling of a George Santos, and the vindictiveness of Don Corleone."
Talton details a number of allegations, including that Ward encouraged employees to misuse customer data for personal gain in violation of company policy, misled employees about their equity compensation, and directed Carta to contract with companies that he had personally invested in. Talton also alleges that Ward made acquisitions that favored his friends without due diligence, and maintained two sets of books for its operations in Brazil.
A spokesperson for Carta declined to comment on the lawsuit. After the publication, the startup settled a separate but related lawsuit against former chief product officer Heidi Johnson in California. In that suit Carta was alleging that Talton shared the embarrassing recordings with Johnson and was asking for an injunction to prevent her from releasing them.
The terms of the settlement could not be learned. A notice filed by Carta's lawyers with the court said only that "the parties have reached a settlement" which "requires certain actions."
Talton's lawyer also declined to comment.
The specifics of many of the allegations in the lawsuit have been heavily redacted at the insistence of Carta. Other large sections of the suit have been redacted entirely and it's unclear what they contain. In a court filing, Carta said it requested the redactions to conceal attorney-client privileged information, trade secrets, and the names of people not party to the lawsuit.
Carta fired and then sued Talton in 2022 after it was discovered that he secretly recorded his conversations with CEO Henry Ward, General Counsel April Lindaur, and unnamed board members. Carta has said in previous legal filings that these recordings would be damaging to the company's reputation. Talton's firing also came after he complained to the Carta's board about widespread discrimination at the company as well as Ward's inappropriate conduct.
Talton originally raised the concerns in an October 2022 letter he sent to the company's board, which includes Carta investors Marc Andreessen, Arjun Sethi, and Joe Osnoss. A redacted copy of the letter, which has not been made public until now, is included in the lawsuit.
The lawsuit also accuses Ward of burying complaints of sexual harassment and discrimination and retaliating against anyone who complained about misconduct.
The filings recount a conversation between Ward and the company's compliance chief Suzanne Elovic in which Ward is alleged to have said, "you think your job is to protect the Company from me! Suzanne, I am the Company!". Elovic was later fired after objecting to Ward's promotion of Jeff Perry, an executive with multiple outstanding complaints of harassment and discrimination against him.
Additionally, Talton is suing Carta for defamation after the company included in its initial lawsuit sexually explicit text messages taken from his personal iCloud account and accused him of sexual harassment, misogyny, and racism. The company has since removed those allegations and text messages from its lawsuit but Ward has continued to disseminate them on Medium and X.
Talton says in his suit that this has made it impossible for him to find employment, with at least one employer rescinding an offer after the accusations were made public.
In September of last year Talton filed a complaint with the Equal Employment Opportunity Commission alleging that he was illegally fired for raising the complaints. The EEOC declined to investigate his allegations instead issuing what's known as a right-to-sue letter, a precursor to the lawsuit Talton filed today.
This latest lawsuit was filed just days after Carta shut down its secondary trading business following allegations that the company misused private customer data to target angel investors for sales outreach. Ward initially took to X to blast the customer who raised the concerns before later announcing the shuttering of the business in a chastened blog post calling it "my greatest failure and disappointment."
The move effectively puts an end to Ward's dream—backed by $300 million from Andressen Horowitz and others—of becoming the "Nasdaq for private markets".
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