Citadel in Fresh Dispute With Balyasny Over Hedge Fund Talent

Citadel and Balyasny Asset Management are engaged in a new dispute over hiring, marking at least the second time in as many years that the two firms have clashed in an intensifying competition for hedge fund talent.

(Bloomberg) — Citadel and Balyasny Asset Management are engaged in a new dispute over hiring, marking at least the second time in as many years that the two firms have clashed in an intensifying competition for hedge fund talent.

Miami-based Citadel led by billionaire Ken Griffin has alleged that several of its employees who left to join Balyasny had misappropriated its confidential information, according to people with knowledge of the matter. Citadel has sent a demand letter to Balyasny, typically seen as a final warning before legal action is taken, the people said, asking not to be identified because the information is private.

“The allegations outlined in the letter are without merit,” a spokesman for Balyasny said. A representative for Citadel declined to comment.

The world’s biggest multi-strategy investment firms such as Balyasny and Citadel rely on dozens of teams of traders to bet across asset classes and regularly hire to replace under-performing staff, expand into new areas or strengthen expertise. Demand for talent has led to millions of dollars in signing bonuses, a higher cut of trading profits and payouts for non-compete periods becoming a norm as the hedge funds tap into a limited pool of eligible candidates.

Firms poaching from each other has brought conflicts, litigation and punitive measures to try to retain talent or prevent trading secrets from leaking out.

The current depute between Citadel and Balyasny marks at least the second tussle between the two industry heavyweights in the past two years. In 2021, the two firms sparred over several former Citadel employees hired by Balyasny who were accused of being in breach of their contracts. 

Balyasny settled with Citadel back then and agreed not to hire staff, or former staff, from Citadel’s Global Fixed Income business for a limited period of time. The agreement expired earlier this year, two separate people familiar with the matter said. Citadel sent the latest letter after that expiration, the people said.

Talent has long been a flashpoint for competing hedge funds. In 2018, Schonfeld Strategic Advisors filed a lawsuit against its former head of human capital and ExodusPoint Capital Management, seeking to bar them from using confidential information to solicit and hire its employees. The bid was denied.

Also in 2021, Citadel Securities reached a truce with British hedge fund GSA Capital Partners over the attempted hiring of a senior trader, ending a lawsuit that was set to consider the makeup of a secret algorithm.

–With assistance from Amanda Cantrell.

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.