Ordinarily, no news gets out of the very secretive hedge fund DE Shaw. This changed recently when it required everyone to either sign a new non-compete agreement or be fired. Odd enough on its own, it’s also the date that employees have to sign this agreement that is drawing attention.
Last May, Managing Director Daniel Michalow was fired after allegations that he had acted sexually inappropriately with several female coworkers. He denied the allegations, stating that he might be a real jerk at times but that being sexually inappropriate wasn’t a line he would ever cross.
DE Shaw is a hedge fund that uses computer algorithms to determine which stocks to trade. Management said the new non-compete agreements would bring the company in line with what the rest of the hedge fund industry is doing. However, the date these need to be signed by, September 16, is the same date that Daniel Michalow’s non-compete agreement with DE Shaw expires.
It seems obvious that DE Shaw management is concerned that he will poach their hedge fund’s employees. DE Shaw is stating that the date is just pure coincidence but it’s still very odd given how detail-oriented this company is. Internal correspondence has been leaked that shows this company is very serious about everyone signing the new agreement.
It doesn’t make much sense for employees to leave DE Shaw to join Daniel Michalow when they can just stay put and see how things play out. However, some of its pissed-off portfolio managers may decide to leave as it appears their future compensation might be cut. DE Shaw leadership even asked its managers for a pledge of loyalty earlier this year. More than a few of its employees might just decide to leave and take their skills elsewhere.