Hedge fund Two Sigma will likely have to pay up to $100 million to settle a Securities and Exchange Commission investigation into a trading scandal at the firm. The Wall Street Journal reported Thursday.
The hedge fund is likely to be held accountable for the way it oversaw a former employee who was at the center of misconduct that led to hundreds of millions of dollars in unexplained profits and losses, the report added, citing people familiar with the matter.
The researcher allegedly modified business models without authorization.
Two Sigma and the regulator are in talks and the outcome could be a smaller payout for the company, the people added.
The SEC and Two Sigma did not immediately respond to Reuters’ requests for comment.
Two Sigma co-founders, John Overdeck and David Siegel, decided to step down as CEOs in August.
The hedge fund, with $60 billion in assets under management, disclosed in a regulatory filing last year that a rift among its top managers poses governance challenges and a material risk to the firm.
Both Overdeck and Siegel, who founded Two Sigma in 2001, will continue as co-presidents.
