DE Shaw’s New Employee Contracts VS. Mr. Michalow

In May of 2018 a manager who worked at DE Shaw was fired because of accusations that he was sexually inappropriate with multiple female employees. Because of that situation it revealed a hedge fund. Now DESCO is still dealing with what was recently brought into light. This is how DE Shaw is addressing the issue.

The company has decided to give all their employees to sign a new agreement that has non-compete terms. If anyone does not sign it or chooses not to, they will be immediately fired. They will be able to keep the compensation that the employees would usually have to give up.

The managers that work there disagreed with what the firm is doing. Since they have one of the largest hedge funds that uses algorithms to trade, they wanted to make it work with common hedge funds.

They decided to do it on September 16th because of the previous manager that had gotten fired Mr. Michalow. Since he had left in March of last year for him to be able to hire DE Shaw employees, he has to wait 18 months since his last date of employment because of restrictions to interference. DE Shaw claims this is purely a coincidence. The article says that it is strange for them to open a door like that the second Mr. Michalow can work again.

The article asks if Michalow really did do the acts he did why would they be getting rid of so much talent during such a time period. It is also hard to understand why so many people will take a smaller check than stay at a hedge fund that can still pay very high.

However, DE Shaw showed that total comp with end up making everyone who is leaving or staying go through hard times. The scenario could end up very bad for DE Shaw which more employees refuse to sign and go to work with Mr. Michalow.