DE Shaw Making Changes After Managing Director Fired

Recently, the online financial news source Deal breaker published a newsletter regarding a new corporate mandate at DE Shaw that has come about, apparently, due to the firing of one of their Managing Directors, Daniel Michalow (see: “DE Shaw Telling Its Traders to Leave Now or Pretty Much Stay Forever,” by: Thornton McEnery, June 5, 2019 ). Following is a brief background on DE Shaw and a recap of the article.

D.E. Shaw group (DE Shaw) is a technology development and investment firm with a global reach. The company was founded in 1988 in New York City by David E. Shaw, a group of six employees and $28 million in capital. The firm rapidly became a leader in qualitative investing using computer algorithms. DE Shaw’s leadership today is composed of a five-person Executive Committee who have all worked together for over twenty years.

The impetus for the new corporate mandates seems to be a result of Daniel Michalow being fired from DE Shaw for sexual inappropriate behavior with his female employees. Michalow denies being guilty of this charge, with the quip: “I’m a dick, but not a perv!” The big change in play is an order for all DE Shaw employees to sign a new non-compete contract. The date for this new contract to take effect was set at September 16, 2019. Mr. Michalow’s last day of employment was March 15, 2018. Doing the math, one sees that the 18 month “restriction on interference” clause in this new contract expires on the night of September 15, 2019.

So, there were a few (dramatic) questions left outstanding. Was Daniel Michelow indeed guilty as charged? Did the other DE Shaw employees see it that way (especially the females)? Will any DE Shaw employees leave and join Michalow in a new venture?