SAC Seeks Two-Year Contracts, Threatens Litigation To Hold On To Traders

Apr 2 2014 | 1:37pm ET

SAC Capital Advisors is pursuing a carrot-and-stick approach to holding on to investment talent.

The hedge fund, which will become a family office called Point72 Asset Management on Monday under the terms of an insider-trading settlement, has not seen a mass exodus of traders. But there has been a steady erosion of its staff, which once numbered more than 1,000 and now stands at about 850.

To combat that, SAC is taking two approaches: It is asking top portfolio managers to sign two-year contracts that would keep them at the firm until the end of 2016. And it is threatening those who join other firms before their contracts expire with lawsuits, The New York Times reports.

The push for two-year contracts is not sitting well with some at the firm, who tell the Times that they feel they are being punished for loyally sticking by SAC founder Steven Cohen through years of insider-trading investigations, culminating in last year’s guilty plea and an agreement to cease managing outside capital.

As for those roughly dozen traders who left before the end of their contracts, litigation was avoided through agreements to forfeit deferred compensation. Those former employees will also not be permitted to start their new jobs until their contracts expire.

Similar deals could be struck with others planning to leave the firm. Among that group, top traders David Fiszel and David Rosen are said to be exploring an exit.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

A Hard Look At Your ‘Soft’ Hedge Fund Marketing Information

Dec 8 2016 | 9:03pm ET

Conventional wisdom holds that due diligence examines quantitative as well as qualitative...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR