Cofounders of a $60 billion hedge fund disagree about nearly everything and it's created a ‘material risk’ for their clients
A rift between the billionaire co-founders of Two Sigma Investments over the firm’s organization and succession plans, as well as other disputes, could pose a threat to its clients.
Ongoing disagreements between John Overdeck and David Siegel, who started the quantitative hedge fund in 2001, were so strained that the firm took the rare step of citing them as a material risk in a March 31 regulatory filing. The Wall Street Journal reported on the disclosure earlier Tuesday.
Overdeck and Siegel, who are the only members of the firm’s management committee, have failed to agree on defining roles and responsibilities for C-level executives and chief investment officers, according to the filing. They also disagree over the firm’s design and management structure, corporate governance and succession plans.
A spokeswoman for New York-based Two Sigma, with about $60 billion of assets under management, declined to comment.
“If such disagreement were to continue, the adviser’s ability to achieve client mandates could be impacted over time,” Two Sigma wrote in the filing.
The tensions are already affecting the ability of employees to fully implement key research, engineering or business initiatives, the firm said in the filing. It could also affect Two Sigma’s ability to attract and keep talent.
A group of senior modelers who worked under Overdeck threatened to quit if Siegel didn’t take a step back, the Wall Street Journal reported. As for Two Sigma’s succession plans, Overdeck wants to keep an operating role, while Siegel prefers handing control to a chief executive officer and having the duo stay in their chairman roles, according to the Journal.