Managing Director Daniel Michalow’s employment contract was recently terminated for allegedly being sexually inappropriate with women at the workplace. The whole situation turned out to be a nuisance not only to Michalow, but also to DE Shaw because its image was tainted. Additionally, the situation revealed the little dirty secrets behind the closed doors of the company. The company appeared to cover up for the hedge fund misbehavior.
DE Shaw is still recuperating from the damages caused by Michalow’s whole situation. The situation shook the future of the firm up. Today, the firm is taking serious measures to put everything in order. One way they are doing that is requiring employees to sign a non-compete agreement. The deadline for signing was set for September 15th and any failure to comply was met with termination from employment.
Managers at DE Shaw revealed that they had to take the action to enforce compliance with industry standards at the firm. The firm is one of the largest funds in the country that trade with computer programs. The deadline for compliance with the order overlapped with the end date of Michalow’s eighteen-month “restrictions on interference” clause which is featured in the executive’s employment contract. That did not seem coincidental in as much as DE Shaw claimed it was. It is rare for DE Shaw to let the date overlapping to occur.
DE Shaw was probably fearing that Michalow might starting poaching its investment talents. It is clear that the firm is still in fear of what Michalow is capable of. The firm made sure the agreement-signing was successful and executed the promises it has pledged to rebellious employees. However, people have found the idea of making employees sign the agreement yet it is unlikely for a person to leave a potentially large-size check for a medium-sized one. The leadership committee of the company confirmed that things are not going on well at its headquarters in Kremlin. They are looking for ways to keep its investment talents. It seemed appropriate to let the staff declare loyalty to the company or pack and leave.