The prominent U.S. hedge fund DE Shaw and four senior executives must pay $52.1 million to a former top money manager who accused the firm of defamation, an arbitration panel ruled.
Dan Michalow, 39,wasterminated by DE Shaw in 2018, which at the time said his departure resulted from “gross violations of our standards and values.”
But in a ruling issued on Wednesday, a Financial Industry Regulatory Authority (FINRA) arbitration panel found DE Shaw and the executives liable to Michalow for defamation, and found specifically that Michalow “did not commit sexual misconduct.”
The executives are Eddie Fishman, Julius Gaudio, Max Stone and Eric Wepsic, and sit on DE Shaw’s six-person executive committee.
“We were disappointed by the outcome of the arbitration, and we stand by the decision we made in 2018 to terminate Mr. Michalow’s employment,” DE Shaw said on behalf of all defendants.
Michalow has denied wrongdoing. His departure came not long after the start of the #MeToo movement, where hundreds of rich and powerful men have been accused of sexual misdeeds.
“I am excited to get on with my life and career,” Michalow said in an interview, adding that hedge funds “have a fiduciary duty to tell the truth to their investors.”
Michalow joined DE Shaw in 2004 after graduating from Harvard University, and became a partner in 2011.
He was helping run the firm’s discretionary macro strategy, overseeing about $6 billion of capital, when he departed.
The original arbitration claim sought $600 million for defamation.
DE Shaw is among Wall Street’s biggest hedge funds, and also known for quantitative investing.
FINRA arbitration awards generally cannot be appealed. There are limited exceptions for awards tainted by fraud, misconduct or arbitrator bias, or awards that are completely irrational.
Michalow’s lawyer, Tom Clare, in a statement said the outcome “sends a strong message that DE Shaw’s conduct, which misused and weaponized an important cultural movement and put profits ahead of the truth, was both morally and legally wrong.”