To the unsuspecting eye, DE Shaw is known as one of the largest hedge funds in the world that is known for holding over $50 billion in assets under management (according to statistics recorded as of March 2019).
But the New York-based firm is known as more than a successful hedge fund to those who are involved in the investment sector. To industry insiders, DE Shaw’s perception is of a company where secrecy comes front and center.
Very recently, DE Shaw asked its employees to sign a noncompete agreement that ensures that they are not going to go and work at a competitive firm immediately after departing DE Shaw.
While this may sound like something that’s standard practice for a financial firm, DE Shaw’s apparent intention goes beyond that. By the looks of it, the firm is taking this action to keep employees from joining any possible venture that is launched by Daniel Michalow, a partner that the firm fired in early 2018, and whose “restrictions on interference” expired on September 15, 2019.
By asking its employees to take the noncompete pledge or giving them the option to leave the company with conditional compensation, it appears that DE Shaw was trying to keep them from joining any hedge fund that would be started by Michalow.
But here’s where it gets interesting. DE Shaw isn’t forthcoming to its employees about this action being tied to Michalow. Instead, the firm insists that it is, in fact, a regular practice to “be in line” with conventional hedge funds.
With September now coming to an end, it is not too far off where employees who chose to leave DE Shaw than sign its noncompete might spill the beans. But so far, those looking from the outside can only hope that a firm with the stature of DE Shaw would start being transparent to the people who work for it.