Two Sigma’s billionaire co-founders are facing fresh arbitration proceedings as a long-running dispute over governance and management at the $80bn quantitative hedge fund continues to escalate, according to a report by Bloomberg.
The firm disclosed two separate arbitration matters in a recent letter to investors: one brought by entities linked to co-founder David Siegel’s family and concerns the handling of a former employee’s claims; and the other involving an unresolved dispute over the firm’s management structure.
The Siegel family-related case was referred to arbitration on 17 August. Entities associated with Siegel allege that fellow co-founder John Overdeck had undisclosed professional and financial conflicts connected to an earlier dispute involving a former Two Sigma employee.
That employee had sought severance and deferred compensation roughly two years after leaving the firm. Siegel’s family entities allege that Overdeck mishandled the matter and that Carter Lyons, the co-CEO selected by Overdeck, did not approve counterclaims against the former employee.
The arbitration claim alleges that the actions breached fiduciary obligations owed to Two Sigma’s owners. The investor letter said neither Overdeck nor Lyons had yet responded to the allegations.
A second arbitration proceeding centres on the composition of Two Sigma’s management committee.
The dispute follows the departure of Scott Hoffman, whom Siegel had selected to share leadership responsibilities. Hoffman resigned last year, citing what he described as continuing governance difficulties. Siegel subsequently appointed Seth Platt to replace him on the two-person management committee.
However, the parties disagree over whether Platt’s appointment automatically makes him co-CEO alongside Lyons. Platt filed a demand for arbitration on 18 August seeking to resolve the issue.
The latest disputes are the newest chapter in a deterioration of relations between Siegel and Overdeck, who founded Two Sigma in 2001 and turned it into one of the world’s largest quantitative investment firms.
