(Bloomberg) -- Two Sigma Investments’ billionaire founders, John Overdeck and David Siegel, are heading to arbitration after a longstanding feud over the direction of the quant hedge fund.
Two Sigma, which manages more than $60 billion, disclosed the arbitration and a pair of executive departures in a letter to investors Wednesday. The firm said in the letter that it isn’t a party to the dispute and doesn’t intend to share regular updates about it with clients, according to people familiar with the matter.
“While the arbitration between the firm’s founders runs its course, the management team remains focused on serving our investors and strengthening Two Sigma for the long term,” a spokesperson for New York-based Two Sigma said in a statement.
The firm didn’t elaborate on the details of the arbitration dispute.
Compliance chief Carsten Otto and Co-General Counsel Greg Shih, a 13-year veteran of Two Sigma, have also left the firm, the people said.
In August, after years of quarreling, the two founders announced they were stepping down as chief executive officers and handing day-to-day management to two new co-CEOs — Carter Lyons and Scott Hoffman — while retaining their roles as chairmen.
The spat had become so strained that the firm identified the rift as a material risk in a March 2023 regulatory filing — an unusual move for any hedge fund, let alone one as secretive as Two Sigma. The founders disagreed over myriad matters related to operations — including organizational and succession planning, defining roles and responsibilities for top executives, and the firm’s design and management structure, according to the filing.
Two Sigma’s biggest funds, Spectrum and Absolute Return Enhanced, respectively returned 10.9% and 14.3% last year, one of the people said. The funds mostly make quant equity wagers but also invest in other strategies.
(Updates with co-CEOs in sixth paragraph, fund performance in last.)
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