We're about to find out if Finra is cool with bad Mel Gibson impressions or nah because former D.E. Shaw MD Daniel Michalow is adding some more drama to his spicy beef with his spice-averse former employer.
David Shaw's quietly merry band of poet quant warriors have found themselves on the receiving end of a Finra complaint filed by the firm's most infamous apostate. As he promised a few months back, Michalow has formally moved to lodge an official action against his old fund, demanding that D.E. Shaw make some kind of statement acknowledging that they wronged Michalow by using him as a sacrificial lamb in the #MeToo moment by firing him publicly for sexual harassment (which Michalow seems to deny) instead of telling everyone that he was let go for being a difficult asshole, (which Michalow seems to admit is possibly very true) and that they're sorry...and also a few hundred million bucks.
Last week, Daniel Michalow filed the complaint with the Financial Industry Regulatory Authority, or Finra, said his lawyer, John Singer. Mr. Michalow is seeking hundreds of millions of dollars in restitution and a “corrective statement” from the firm, Mr. Singer said. The filing isn’t public.
In March, the company gave Mr. Michalow the option to retire, which he chose to do, people close to Mr. Michalow and a person close to D.E. Shaw said. D.E. Shaw later said Mr. Michalow was fired after an internal investigation. Finra arbitrates complaints about the business activities of brokerage firms.
While a non-public Finra complaint filed by a disgruntled former employee would be a shrug emoji moment in most situations, D.E. Shaw has been a bit rattled by the fallout from the aftermath of Michalow's departure. The firm is notoriously media-shy, so Michalow's name back in the WSJ is not the best way to start the week. Aside from L'affaire Michalow, D.E. Shaw has been one of- like, every quant hedge fund fending off talent raids from apex talent predator Citadel [and lest we forget one of the world's first great quant funds is also having to deal with the possible rise of "Psychic quants"].
Michalow deciding to drag this thing out might backfire on him in spectacular fashion, but it definitely will bring more attention to something that D.E. Shaw seems dead-set on treating as a private family dispute handled publicly. And we'll be excited to continue to watch this all play out...which is annoying for everyone.