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May 08, 2019  

ExodusPoint: Schonfeld Staffers Underpaid

ExodusPoint Capital is firing back at Schonfeld Strategic Advisors.

ExodusPoint, which was sued by Schonfeld last year for poaching staff, has filed a counterclaim in which it boldly asserts that it will continue recruiting Schonfeld’s “systematically undercompensated employees.”

“There is a great deal of interest and excitement in the industry about the prospect of working at ExodusPoint and apparently widespread unhappiness with Schonfeld, even at the senior level,” ExodusPoint said.

The counterclaim, filed April 26, also challenges a provision in some of Schonfeld’s employment contracts that prohibits ex-employees from soliciting former colleagues for a period of five years. That’s an unreasonably long non-solicitation period, ExodusPoint argues. Schonfeld filed its lawsuit last October after ExodusPoint hired Alessandra Sassun, the former head of human capital at Schonfeld. Schonfeld claims Sassun tried recruiting other Schonfeld staffers — a point ExodusPoint denies.

Non-solicitation agreements typically are in force for 1-2 years, hedge fund recruiters said. Courts have “repeatedly found five-year durations unreasonable,” ExodusPoint argues.

ExodusPoint wants Andrea Masley, a justice with the New York State Supreme Court’s Commercial Division, to declare Schonfeld’s non-solicitation clause unenforceable. It also is asking Masley to find that, in any case, Sassun didn’t violate the terms of her employment contract with Schonfeld.

On April 3, Masley denied a motion by Schonfeld to temporarily bar ExodusPoint from seeking to hire more Schonfeld staffers. She said Schonfeld failed to show “irreparable or even continuing harm” caused by ExodusPoint’s recruiting efforts.

The increasingly bitter legal dispute stems from ExodusPoint’s efforts, starting in late 2017, to assemble the largest day-one staff in the industry’s history. The New York firm, led by former Millennium Management executive Michael Gelband, launched a multi-strategy fund on June 1, 2018, with $8 billion of commitments, and by yearend had a staff of 203 — including 85 investment professionals. Since then, ExodusPoint has increased its headcount to about 300.

To date, ExodusPoint has hired three staffers from Schonfeld. In addition to Sassun, they are Valmiki Prasad, head of execution research, and Gregoire Vidal, head of business development for quantitative strategies.

Schonfeld, too, has been expanding its staff at a rapid clip. It hired 43 new employees in 2018, including 38 investment professionals, for a total staff of 123 at yearend. At the start of 2019, the firm was running about $2.3 billion in its multi-strategy Schonfeld Strategic Partners Fund and an equity-focused vehicle.

Schonfeld Strategic Partners gained more than 16% last year — the best showing among large multi-strategy operations. ExodusPoint’s fund gained 0.6% from June 1 to Dec. 31.