Ericherrmann

DE Shaw: Remaining Strong Amid Negative Speculations

DE Shaw employees have until mid-September to either comply with the newly released non-compete terms or not. According to sources privy to the company’s plan, employees who refuse to sign the new agreements risk being terminated from employment, although they will be allowed to retain the deferred compensation that they would normally be required to forfeit.

DE Shaw is one of the world’s largest hedge funds, boasting over $50 billion under its management. Through its managers, the firm told staff early April that the firm was contemplating imposing the non-compete agreements to bring the firm at per with the global hedge fund standard practice.

However, most people are asking why September. Apparently, this exactly the same month when DE Shaw fired one of its managing directors, Daniel Michalow, whom it accused of getting sexually immoral with the female colleagues. Whereas these months may seem coincidental, the firm insists they have nothing to do with the non-compete terms. Again, DE Shaw isn’t trying to force its employees to sign these new non-competes.

Although it is difficult to imagine that lots of people are likely to walk away from a hedge fund whose future might seem uncertain for now, there is a huge downside risk here. As such, the firm is clearing any doubts that things could be getting a bit messy. But it is certain that a few employees and managers might opt to leave the hedge fund. According to sources close to DE Shaw, the firm asked its employees to pledge their loyalty to the firm during the leadership committee late last year.

As much as the future might seem not so bright for DE Shaw, the hedge fund still remains quite strong and more investors are still flocking it in droves. Although there are a few scenarios such as a couple of employees refusing to sign the new non-compete terms, the firm’s fortunes seem not have been affected and remain stable.

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