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Hedge fund headhunters have been losing a lot of money.

Headhunters welcome hedge funds' attack on rogue candidates

You're going for a job at a big multistrategy hedge fund when another big multistrategy hedge fund comes along and wants to hire you. You've already signed the contract, but the new offer is sufficiently differentiated to make you think signing the contract doesn't really matter. You ditch the first fund and join the second. Who cares?

Firstly, the hedge fund that thought it had hired you. Secondly, the headhunter who thought he/she had placed you and who lost a huge fee when you reneged. 

Headhunters in London say rogue candidates have been an increasing issue this year. "It's soul-destroying," one tells us, speaking off the record. "People have signed terms and then they're gazumped," he adds, using a phrase common in the British housing market to denote house buyers who swoop in with a higher price at the last moment. "I've lost six figure fees because of it."

Fortunately for impoverished headhunters, hedge funds themselves are doing something about the issue. Bloomberg reports today that Millennium and Brevan Howard, both of which have been doing some enormous hiring this year have begun adding clauses to contracts stating that candidates will need to pay damages if they don't join as promised.

Headhunters we spoke to said the rogue candidates are most prolific in London. In the US, hedge fund candidates are more mannered. "Most people fulfill their commitments to accept a role. It's very rare that they back away," said one.

In London, though, candidates seem to have been taking their chances. "It's a very tight market and people have more offers," says another London headhunter. "People have always been snapped-up before signing, but being snapped-up after signing is a new thing."

Headhunters are paid a proportion of candidates' compensation, but only if the candidates actually join.

Rogue candidates that sign hedge fund contracts and then have a change of heart, risk more than just paying  a fine and hurting headhunters' pockets. Headhunters say they will also be blacklisted. For this reason, such behavior is not advisable at the start of a career, but might make sense later on. "If it's your last big move you might not care," muses the headhunter.

Under the new contracts, hedge funds themselves are also committing to hiring people. They too have to pay damages if they pull out.

Brevan Howard didn't respond to a request to comment. Millennium declined to comment.

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Photo: eFinancialCareers/Dall-e

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AUTHORSarah Butcher Global Editor
  • Ni
    Nik Pocuca
    20 December 2022

    From the aggrieved company perspective: this clause reconciles the transitional cost of on-boarding and hiring new candidates for the target job. You get your money back from trying to hire the candidate, but ultimately, end with getting stood-up. From the other perspective, as a company looking to "swoop" your candidate, what is to stop me from adding "I will pay the damages that are associated with the breach of contract from your current company, and, bump your salary". I still get your candidate, you still get paid.


    Blacklisting candidates for making decisions that are in their best financial interest only reduces your future pool of applicants.

  • Tr
    TransonicShock
    1 December 2022

    The problem is that everyone is chasing after the same people. Recruiters need to bring up more candidates. There are a ton of talented people who can be coached and trained to perform. I would be glad to be on the loosing side of candidates mentioned in this article. It's like being outbid for a house thats just too expensive when you know the market can tank at anytime.

  • AB
    AB
    1 December 2022

    Headhunters and recruiters spend their lives ignoring 90% of candidates, this seems somewhat fair

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