By Peter Rudegeair

A vendetta between the billionaire founders of Two Sigma Investments flared up last month, prompting a new leadership battle at their $70 billion hedge-fund firm.

John Overdeck and David Siegel have been feuding for years at the quant-trading powerhouse they started 25 years ago. In August 2024, they stepped down as co-chief executives after their fights had reached a point where Two Sigma couldn't make key decisions about management and governance, The Wall Street Journal previously reported.

Trying to insulate Two Sigma from their strife, they settled on a new leadership structure where each of them got to name one member to the firm's two-person management committee.

Overdeck chose a Two Sigma veteran, Carter Lyons, and Siegel selected a former Lazard executive, Scott Hoffman. The two picks were named co-CEOs while Overdeck and Siegel remained Two Sigma's principal owners and co-chairmen, maintaining indirect control over the firm.

That fix has broken down.

First, last year, Overdeck retook Lyons's seat on the management committee, though Lyons remained co-CEO.

Then, last month, Hoffman resigned, citing "ongoing governance challenges since Mr. Overdeck's return" according to a regulatory filing this week. Siegel designated Seth Platt, a former executive at activist hedge-fund firm Sarissa Capital, to take Hoffman's spot on the management committee.

Platt moved to fire Lyons "given his view that the current co-CEO undermined his authority," according to the filing. Overdeck stepped in to halt Lyons's dismissal, which he viewed as "imprudent and baseless," and insisted it go to a dispute-resolution process, the filing said. There is a question over whether Platt's appointment automatically made him the co-CEO and gave him the authority to fire Lyons, the filing said.

"We are grateful to Scott for his contributions to Two Sigma and excited to welcome Seth, who brings nearly three decades of investment management experience to the firm," a Two Sigma spokesperson said in an email. "We are focused on sustaining our positive momentum and providing differentiated returns for our investors."

Succession drama is common at hedge funds moving on from their founders. Ray Dalio blew past his own 10-year timeline to give up control of Bridgewater Associates and went through numerous heirs apparent.

Few are as rancorous as what has gone on at Two Sigma. Before stepping down as co-CEOs, Overdeck and Siegel rarely appeared together at firm events and frequently sniped at each other in meetings, the Journal previously reported. Two Sigma's original operating agreement stipulated the duo had to agree on key decisions.

Even after the 2024 pact, Overdeck and Siegel quarreled over whether either of them breached their contracts or fiduciary duties, a fight that went into arbitration last year. All claims and counterclaims were dismissed, the filing said. Arbitrators declined to award any relief and found that Overdeck's and Siegel's "over-the-top efforts to assert claims against each other" hurt their credibility.

Despite Two Sigma's "undeniable success, the Co-Chairmen's ongoing disputes and differing views on corporate governance have caused management dysfunction," the arbitration panel found, according to the filing.

Overdeck, a mathematician, and Siegel, a computer scientist, met while working at quant hedge-fund pioneer D.E. Shaw Group in the 1990s and founded Two Sigma in 2001. The firm uses computer-driven strategies to trade based on patterns and signals it sniffs out in markets and big data sets.

So far, investors have focused more on the firm's strong performance than on the infighting. Its Absolute Return Enhanced fund, gained about 3% in March and is up 3.7% so far this year, a person familiar with the matter said. Its Spectrum fund gained 3.1% in the first quarter, the person added.

"Our investment strategies continue to deliver strong, consistent performance, assets under management remain at record levels and we are investing in our people and our platform," the Two Sigma spokesperson said.

Write to Peter Rudegeair at peter.rudegeair@wsj.com

(END) Dow Jones Newswires

April 01, 2026 15:11 ET (19:11 GMT)

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