Key Takeaways
- • Two Sigma's co-founders David Siegel and John Overdeck face two separate arbitration proceedings, according to a Bloomberg report, as a governance dispute at the roughly $80bn quantitative hedge fund escalates.
- • The Siegel family-linked arbitration, referred on 17 August, alleges Overdeck had undisclosed professional and financial conflicts in handling a former employee's severance and deferred compensation claims, and that co-CEO Carter Lyons did not approve counterclaims.
- • The claim alleges breaches of fiduciary obligations owed to Two Sigma's owners; neither Overdeck nor Lyons had responded as of the investor letter.
- • A second arbitration, demanded by Seth Platt on 18 August, concerns whether his appointment to the two-person management committee, after Scott Hoffman's resignation, automatically makes him co-CEO alongside Lyons.
- • The disclosures, made in a recent investor letter, mark a further deterioration in relations between Siegel and Overdeck, who founded Two Sigma in 2001.
Summary
Two Sigma's billionaire co-founders are facing fresh arbitration proceedings over governance and management at the $80bn quantitative hedge fund, according to Bloomberg. The firm disclosed the two matters in a recent letter to investors, pointing to a dispute that has run for some time and continues to escalate.
The first case was referred to arbitration on 17 August and was brought by entities linked to co-founder David Siegel's family. These entities allege that fellow co-founder John Overdeck had undisclosed professional and financial conflicts connected to an earlier matter 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 Overdeck mishandled the matter and that Carter Lyons, the co-CEO selected by Overdeck, did not approve counterclaims against the former employee. The claim argues these actions breached fiduciary obligations owed to Two Sigma's owners. The investor letter said neither Overdeck nor Lyons had yet responded to the allegations.
The second arbitration centres on the composition of the management committee. Scott Hoffman, whom Siegel had selected to share leadership responsibilities, resigned last year, citing continuing governance difficulties. Siegel subsequently appointed Seth Platt to replace him on the two-person committee. The parties disagree on whether that appointment automatically makes Platt co-CEO alongside Lyons. Platt filed a demand for arbitration on 18 August to resolve the question.
The disputes are the latest development in a deterioration of relations between Siegel and Overdeck, who founded Two Sigma in 2001 and built it into one of the world's largest quantitative investment firms.
The first case was referred to arbitration on 17 August and was brought by entities linked to co-founder David Siegel's family. These entities allege that fellow co-founder John Overdeck had undisclosed professional and financial conflicts connected to an earlier matter 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 Overdeck mishandled the matter and that Carter Lyons, the co-CEO selected by Overdeck, did not approve counterclaims against the former employee. The claim argues these actions breached fiduciary obligations owed to Two Sigma's owners. The investor letter said neither Overdeck nor Lyons had yet responded to the allegations.
The second arbitration centres on the composition of the management committee. Scott Hoffman, whom Siegel had selected to share leadership responsibilities, resigned last year, citing continuing governance difficulties. Siegel subsequently appointed Seth Platt to replace him on the two-person committee. The parties disagree on whether that appointment automatically makes Platt co-CEO alongside Lyons. Platt filed a demand for arbitration on 18 August to resolve the question.
The disputes are the latest development in a deterioration of relations between Siegel and Overdeck, who founded Two Sigma in 2001 and built it into one of the world's largest quantitative investment firms.
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