Two Sigma, the US quant hedge fund firm founded by John Overdeck and David Siegel, is in discussions with the Securities and Exchange Commission (SEC) to settle a probe related to a trading misconduct case, according to a report by the Wall Street Journal.
The report cites unnamed sources familiar with the matter as revealing that the firm could reportedly have to pay up to $100m to settle the SEC charges, which relate to oversight failures concerning a former Two Sigma employee involved in unauthorised modifications to some of the firm's trading models. These actions allegedly led to both significant losses and gains amounting to hundreds of millions of dollars.
According to WSJ's sources familiar the hedge fund and the SEC are negotiating, which may result in a reduced financial penalty.
Neither the SEC nor Two Sigma has provided immediate comments on the situation.
In August, Overdeck and Siegel stepped down as Co-Chief Executive Officers, though they continue to serve as Co-Chairmen. The firm, which manages $60bn in assets, revealed in a regulatory filing last year that a long-running feud between the pair posed a material risk to the business.
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