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The years-long feud between the founders of quant hedge fund giant Two Sigma deepened after one of its new co-chief executives appointed to quell the turmoil quietly left last month.
The departure of former Lazard executive Scott Hoffman was disclosed in a regulatory filing on Wednesday. And the new co-CEO who was chosen to replace him, Seth Platt, is already trying to fire his counterpart.
The fund, which manages more than $70bn, has been mired in acrimony for years due to a clash between its co-founders, John Overdeck and David Siegel.
Their infighting — and its impact on the business — was supposed to be resolved in 2024 when Overdeck and Siegel appointed co-chief executives as their replacements.
Yet even with Siegel and Overdeck no longer overseeing day-to-day operations, the regulatory filing revealed their feud was still affecting the hedge fund and how it functions, with each still having sizeable sway over the future of the firm.
They each chose a successor. Overdeck selected the firm’s then chief business officer, Carter Lyons, and Siegel picked Hoffman, the former general counsel of investment bank Lazard. Lyons and Hoffman were to work as the new co-chief executives and sole management committee members. Overdeck returned to the management committee last March, replacing Lyons.
Hoffman resigned after “ongoing governance challenges”, according to the filing. And now his replacement has become a source of dispute over Platt’s position at Two Sigma.
Overdeck and Siegel each retain power to choose a member of the firm’s management committee. Overdeck is disputing Siegel’s choice of Platt, a family office executive, as Hoffman’s replacement as co-CEO.
Meanwhile, even though Platt has only been in the position for two weeks, he has already tried to fire Lyons as co-CEO because he “undermined his authority”, according to the filing.
Even after Siegel and Overdeck officially stepped down, their feud continued in private. They went to arbitration last year over some of their disagreements.
The claims were ultimately dismissed, but the arbitration panel found that “despite the firm’s undeniable success, the co-chairmen’s ongoing disputes and differing views on corporate governance have caused management dysfunction at Two Sigma”.
“We are focused on sustaining our positive momentum and providing differentiated returns for our investors,” a spokesperson said in an email, who added the firm was grateful for Hoffman’s work at the hedge fund.
The friction between Siegel and Overdeck was revealed in 2023 when Two Sigma took the unusual move of warning that rifts among its management committee members — which included the co-founders — could amount to a “material risk”.
At the time, the infighting appeared to be undermining the hedge fund’s operations. The committee had been unable to agree on organisational structure, responsibilities for top executives and succession plans.
Over the past year, committee members have still not been able to agree on those business decisions, which Two Sigma warned could affect the hedge fund’s ability to retain employees.
