The Big Apple-based hedge fund DE Shaw is known for its algorithm-based investment decisions, an unconventional funding approach, and the $50 billion that it has under management. But to those associated with the finance world, it is also known for its secrecy.
The firm’s sense of surreptitiousness has grown to the point where talking to any outsiders seems impossible, even when the discussion revolves around usual hedge fund practices.
However, with the recent actions that DE Shaw has taken, it seems like the approach also applies to its employees.
What Has DE Shaw Done This Time?
Those keeping tabs on DE Shaw would remember that the firm fired one of its star employees last year over the grounds of misconduct. The employee in question was none other than Daniel Michalow, a prominent partner at the hedge fund who also acted as its managing director.
Fast forward to 18 months later, DE Shaw took the uncanny decision to suddenly ask employees to sign noncompete contracts. According to the firm, this was a decision made for the company to follow standard industry practices. It gave employees the option to either sign the contracts by September 16, 2019 or take subject compensation and leave the firm.
What the firm failed to tell its employees was that the date coincidentally fell right after the day that Michalow’s non-compete expired. This meant that after 18 months of waiting, Michalow was free to approach talent from DE Shaw.
Putting two and two together, it isn’t difficult to see that DE Shaw was apparently taking the action to make sure its employees didn’t get to join hands with Michalow. But as is the company culture at DE Shaw, the company didn’t feel it right to be forthcoming to its employees. Now that the deadline has passed, it might be time for DE Shaw to clear the air. However, seeing the company’s past actions, that sort of a miracle is highly unlikely. All in all, the firm has once again demonstrated that transparency is not one of its strong suits.