A former Wall Street star who was kicked out of a major hedge fund amid sexual harassment allegations at the start of the #MeToo movement has won a record libel award against his former firm, DE Shaw, and four of the company’s top executives. signature, according to a presentation by a panel of arbitrators on Thursday.
The panel of arbitrators, from the Financial Industry Regulatory Authority, awarded Daniel Michalow, a former partner at DE Shaw, $52 million in the dispute, which has lasted nearly four years. In their decision, the arbitrators said they concluded that Mr. Michalow had not engaged in “sexual misconduct.”
FINRA, which resolves labor disputes between brokerage houses and their employees. It is believed to be the largest award in a FINRA-supervised defamation case.
Unlike a court case, an agreement in a FINRA arbitration case is binding and cannot be appealed.
“It is possible to overcome power, arrogance and lies with persistence, humility and truth,” Michalow, who denied sexual harassment allegations from the start, said in a statement. He added that the firm and its leaders were self-proclaimed “social activists and models of corporate governance at my expense.”
Tom Clare, Michalow’s attorney, who has represented others accused of sexual harassment, said in a statement that the award “sends a strong message that DE Shaw’s conduct, which abused and weaponized a major movement culturally and put profit before truth, was both morally and legally wrong.”
A spokesperson for DE Shaw said in a statement: “We were disappointed with the outcome of the arbitration and stand by the decision we made in 2018 to terminate Mr. Michalow’s employment with the firm.”
Michalow had been one of DE Shaw’s star money managers before leaving in March 2018. The firm says Michalow was fired, but a source close to Michalow said the former money manager left voluntarily.
Shortly after Mr. Michalow’s departure, stories surfaced that he had been accused of sexual harassment at the firm. DE Shaw issued a statement at the time saying that an internal investigation had found that Mr. Michalow had committed “serious violations of our standards and values”.
In September 2018, Mr. Michalow filed a defamation lawsuit against the company, seeking $600 million in damages.
Mr. Michalow joined DE Shaw in 2004 after graduating from Harvard. He rose rapidly, becoming a partner in 2011 at age 29 and reportedly receiving $40 million in compensation that year. His last job at DE Shaw was co-head of the company’s discretionary macro strategy, which at the time had $6 billion in assets.
DE Shaw is one of the top-grossing and secretive hedge funds on Wall Street, managing more than $50 billion in assets. It is one of a group of hedge funds, including Renaissance Technologies, that pioneered the use of sophisticated quantitative strategies to manage giant investment portfolios. Before joining the Obama administration as chief economic adviser, Larry Summers worked part time at DE Shaw, earning $5.2 million a year. The firm has also gained some fame for being where Jeff Bezos worked while hatching the Amazon idea.
Along with the signing, four members of DE Shaw’s management committee were named jointly responsible for the deal, including Max Stone, Julius Gaudio, Eric Wepsic and Eddie Fishman. All four declined to comment for this article.