Funds News

UPDATE 1-Renaissance, Millennium settle trade dispute

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NEW YORK, June 19 (Reuters) - U.S. hedge fund Renaissance Technologies Corp. settled a long-running lawsuit that accused Millennium Partners LP, another fund, of expropriating its quantitative trading strategies, the firms said on Tuesday.

Renaissance, which has strict rules that bar former employees from using intellectual property at rival firms, sued Millennium in December 2003 in New York state court after two of its employees, Pavel Volfbeyn and Alexander Belopolsky left to join Millennium.

Renaissance, a $30 billion hedge fund manager that trades using proprietary quantitative strategies, said it is continuing litigation against Volfbeyn and Belopolsky, but settled with Millennium, which has about $9 billion under management.

Millennium denied wrongdoing but agreed to pay a settlement to Renaissance and terminate Volfbeyn and Belopolsky. The firms didn’t disclose the amount of the settlement, but two people familiar with the matter said Millennium will pay $20 million to Renaissance.

“After four years of litigation, this is an appropriate time for Millennium to settle the litigation and move on with our business,” said Israel Englander, who heads Millennium. He said the firm didn’t have access to code written by the two former Renaissance employees, and would not use it, if it did.

James Simons, the former math professor who founded Renaissance, said the legal discovery process has “strengthened our conviction” the two former employees planned to use company trade secrets. He called the settlement “an important step to protecting our intellectual property.”

Jonathan Willens, an attorney for Volfbeyn and Belopolsky, denied wrongdoing by his clients. “The discovery process has revealed no evidence suggesting misuse of Renaissance’s proprietary information,” said Willens in a statement.

“Renaissance’s alleged trade secrets are nothing more than general ideas that are well known to people familiar with with statistical arbitrage and quantitative finance,” he said.

Willens maintained the purpose of Simons’ civil lawsuit is to “intimidate” current employees from jumping ship and setting up competing strategies at rival firms.

He said Belopolsky and Volfbeyn were “fired by Renaissance because they chose not to sign noncompetition agreements, preferring to leave Renaissance and start developing their own small trading system at Millennium.”

Simons told a New York conference last month that the company has almost no turnover among its 300 or so employees, many of whom are based on a 50-acre campus near Stony Brook University on Long Island, where Simons formerly headed the mathematics department.

“We don’t have any turnover. We’re very careful,” said Simons, adding that two who left “are at the other end of a lawsuit.”