Last Woman Standing: The Firing of Zoe Cruz

“The real problem is that the proverbial glass ceiling is self-reinforcing. The traits that a woman must develop to duke it out on the trading floor are the same traits that will come back to haunt her as she ascends the ranks of management.”

This is the central thesis behind the extremely well researched and thought-provoking piece about the demise of Zoe Cruz, formerly the highest ranking woman on Wall Street before she was fired from her position as co-president of Morgan Stanley in November 2007, as the company’s exposure to the subprime mortgage crisis began to unfold. At the apex of her career, she was earning over $30 million in 2006, and was considered one of the most powerful women in the world and the company’s CEO heir-apparent.

The article, entitled “Only the Men Survive,” by Joe Hagan, was filled with ‘fly on the wall’ quotes about how high-powered aggressive women like Ms. Cruz are really regarded within their own companies. The quotes from insider sources revealed a startlingly frank and pervasive sexism towards women in finance.

For example, Jay Dweck, a former Goldman Sachs executive who had switched over to Morgan Stanley was surprised to see the level to which Morgan Stanley employees went to undermine their female boss. When Ms. Cruz voiced her opinion that the company should pull out of its investments shorting subprime mortgages and going long on higher quality triple-A mortgages that were previously considered to be stable, the company did not immediately back her decision, but instead devoted precious time to questioning her judgment. Mr. Dweck was overheard by several people saying, “At Goldman, this isn’t happening. When they say get out, they get out. At Morgan Stanley, when Zoe says get out, people start negotiating.”

While Ms. Cruz was widely acknowledged to be a sharp trader who took clear decisive positions and made the company billions of dollars, she was also known as a ruthless, hard-edged leader who did not do well at smoothing over conflict with her colleagues or subordinates. While her tough-as-nails demeanor won her the admiration of her mentor CEO John Mack (who later lost confidence in her and let her go, as subprime woes were closing in on him), she also racked up enemies in a harsh business where she demonstrated that she didn’t mind stepping on a few toes to get ahead. Her conflicts with now-CEO of Citigroup Vikram Pandit when he was at Morgan Stanley were legendary.

While some in the company argued that her rough around the edges managerial style and inability to acknowledge dissenting views lead to her downfall, others think that, as a woman, she made a very convenient scapegoat. Said another (male) former Morgan Stanley exec, “Its grotesque to pin this all on Zoe. She broke the rules in the boys’ club. She got promoted over all the boys. They wanted to prove she was never up to it when it all crumbles.” The Glass Hammer has addressed in previous pieces the ‘woman leader as scapegoat for failing company’ motif in greater detail. The New York Magazine article picked up on this theme as well, citing some interesting anecdotal evidence and statistics about women leaders on the chopping block during tough economic times.

While there is no doubt that Ms. Cruz is a role model for women seeing to rise to the highest echelons of finance, she was not necessarily an ally of her female colleagues or of women in general. The NY Mag article noted that she was “not a feminist,” and that women execs at Morgan Stanley didn’t feel any special camaraderie with her based on gender. The Wall Street Journal blog noted that, during her tenure at Morgan Stanley, she opposed flex-time policies for working moms, despite the fact that she herself had three children. The blog also noted that she went back to work within weeks of giving birth to each of her children and made important phone calls to clients and executed trades while in labor. The WSJ blog post about Ms. Cruz’s decision not to play up her working motherhood generated a fierce debate and hundreds of comments, some commending her and other condemning her.

While the sheer toughness of the image of a pregnant woman gritting her teeth and yelling “sell, sell!” into her cell phone is certainly awe-inspiring, it probably doesn’t give much comfort to young women in finance who hope to someday balance their jobs with a family. Still, Ms. Cruz played a singular role on Wall Street. No other Wall Street investment back has a woman who is as a high-ranking as Cruz, or even one poised to move into such a position of power.

Now that Ms. Cruz has left Wall Street and enough time has passed, rumors of her return have begun to circulate. Spies say that she is exploring opportunities with hedge funds or private equity groups. One thing is for certain, Wall Street as not seen the last of Zoe Cruz. Whether she will live to fight another day is not the primary question, however. We are more interesting in learning from her sweeping successes and highly publicized failures, and continuing the stimulating discussion that followed the NY Mag and WSJ blogs regarding her leadership style and what it takes for a woman to get ahead in finance. And, the Glass Hammer wants to know, who is the NEXT Zoe Cruz?