Two Sigma co-founders face two arbitration disputes

Two Sigma co-founders David Siegel and John Overdeck are named in two separate arbitration proceedings disclosed to investors in August. One filing, referred to arbitration on Aug. 17, was brought by entities tied to Siegel’s family and concerns the handling of a former employee’s claim.

The Siegel-linked filing alleges that Overdeck had undisclosed professional and financial conflicts related to an earlier dispute with a former employee who sought severance and deferred compensation about two years after leaving Two Sigma. The filing contends Overdeck mishandled the matter and asserts that Carter Lyons, the co-CEO chosen by Overdeck, did not approve counterclaims against the former employee. The claim alleges breaches of fiduciary obligations owed to the firm’s owners. Neither Overdeck nor Lyons has responded to the allegations, the investor letter noted.

A second arbitration demand was filed on Aug. 18 by Seth Platt, whom Siegel appointed last year to a two-person management committee following the resignation of Scott Hoffman. Platt’s filing asks an arbitrator to resolve whether his appointment automatically makes him a co-CEO alongside Lyons or whether it changes the committee’s composition in a different way.

Hoffman stepped down last year after citing ongoing governance difficulties after being named to share leadership responsibilities. His resignation intensified a longer-running disagreement over the firm’s management structure.

Two Sigma was founded in 2001 and manages about $80 billion. The two arbitration filings follow investor communications about governance and will proceed outside public court. The investor letter did not provide additional operational details or specify remedies sought in the filings.

The arbitrations could take months to resolve depending on the scope of the claims and the procedures the parties adopt.