Founder and CEO Miles Nadal out at MDC

MDC Partners’ controversial founder and CEO Miles Nadal is leaving the company as he battles an SEC investigation into his expenses. He will be replaced by long-serving director Scott Kauffman.

MDC, which owns Anomaly, Crispin Porter, 72andSunny and Albion among others, has grown rapidly although it has yet to turn a profit.

Nadal (left) has already agreed to repay MDC nearly $7m in expenses. The company issued the following statement last night:

“Mr. Nadal has agreed to repay to MDC Partners all expenses that were requested to be repaid by the Special Committee of the Board of Directors, including an additional $1.88 million that was recently identified. In connection with his retirement, Mr. Nadal is required under the Company’s Incentive/Retention agreements to repay $10.58 million in retention amounts received between 2012 and 2015. In addition, Mr. Nadal is not eligible for any compensation payments or severance.”

At the same time Michael Sabatino, formerly chief accounting officer, has resigned and agreed to repay the company $208,535 in cash bonus payments received between 2012 and 2014.

MDC stock opened six per cent lower on news of Nadal’s departure. Nadal’s chief ability (apart from burning through money) was talking shareholders into supporting MDC’s global ambitions despite its poor financial performance. He did manage to collect some good agency brands along the way, which may well be coveted by the likes of Omnicom, WPP and, very likely, Dentsu Aegis which could do with a stronger creative line-up.

With a market cap of ‘just’ $900m (and maybe further to fall) MDC would be well within the reach of all those companies. Private equity firms may also be interested. Dentsu paud £3.6bn to buy media buyer Aegis.

The danger for them – and MDC employees including agency execs who’ve sold their agencies to MDC – is that no-one can be sure what else will crawl out of the MDC woodwork.

(This is an updated version of an earlier story).