Robert Gagliardi, a former trader at Evolution Capital Management, is suing the hedge fund for breach of contract after allegedly being denied a $7.5m discretionary bonus, despite claiming he was responsible for 97% of the fund’s revenues during his 11-month tenure, according to a report by the Financial Times.
In court filings submitted to London’s High Court, Gagliardi – a block trading specialist previously at Segantii Capital Management – argues that he generated over $60m for Evolution between April 2021 and March 2022. He claims the fund’s founder, Michael Lerch, flatly refused to pay the bonus.
Gagliardi contends he was initially told by senior management that a $10m return would be considered “excellent” and exceeded that by a wide margin. The performance even drew praise from a key investor, Zoltan Varga, formerly of Och-Ziff Capital, according to Gagliardi.
However, Evolution Capital has pushed back, asserting in its own filings that it had the discretion to withhold the bonus, citing Gagliardi’s short tenure, breach of employment terms, and an abrasive attitude towards senior management. The hedge fund also said the situation deteriorated further when Gagliardi came under scrutiny by the US Department of Justice during its probe into Morgan Stanley’s block trading practices – although Gagliardi was not charged with any wrongdoing.
Evolution further cited Gagliardi’s links to Pawan Passi, the former head of Morgan Stanley’s US equity syndicate, who was fined $250,000 after admitting to misconduct related to leaking confidential block trade information. Evolution alleges Gagliardi had an “inappropriate” relationship with Passi, which it claims breached trust and contributed to his dismissal in February 2022. The firm is now countersuing to recover $7m in compensation paid during his employment.
Gagliardi denies any impropriety in his relationship with Passi and maintains that the SEC cleared him of any misconduct following its investigation.
