Two Sigma Investments lost a major investor in 2023 amid the long-running dispute between billionaire co-founders John Overdeck and David Siegel, according to a report by Bloomberg citing testimony from Overdeck in his ongoing divorce proceedings.

Overdeck disclosed the investor departure while giving evidence in his matrimonial trial in New Jersey, where his wife, Laura Overdeck, is seeking a share of his stake in the quantitative hedge fund firm.

He said the fallout between the founders had raised concerns among clients about Two Sigma’s governance and ability to operate as expected. Overdeck also warned that making details of the partners’ disputes public could prompt other large investors to reconsider their allocations.

A person familiar with the matter confirmed that the unnamed investor withdrew from Two Sigma in 2023.

Despite the departure, Overdeck said the firm subsequently replaced the client. Two Sigma’s assets under management have since climbed to a record of more than $75bn, while the firm has continued raising money for new investment vehicles.

Two Sigma reportedly declined to comment on Overdeck’s testimony.

The dispute between Overdeck and Siegel has persisted for years and was formally identified by Two Sigma as a material business risk in 2023. The co-founders have also taken their disagreements into arbitration.

Both men stepped away from senior executive positions at the firm, although Overdeck later returned to its management committee.