Morning Coffee: The highly attractive hedge fund manager and the $11m breakup fee. How to use your CFA to get $5m while doing no work

In the tech industry, they have the concept of an “acqui-hire”, which is when a big company makes an acquisition of a startup simply in order to get one or two of its employees working for them.  In the world of multistrategy hedge funds, it’s the other way round – the “talent acquisition” teams of the big pod shops are nominally in the business of recruitment, but bringing a top portfolio manager on board often feels more like a corporate M&A deal, in terms of both the money involved and the amount of legal and due diligence work.

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When Schonfeld Strategic Advisors began getting interested in hiring Adam Grunfeld from Millennium, they found him so attractive, that the administrative hurdles were worth jumping. Schonfeld says it knew that there were “few, if any portfolio managers in the market” who could replicate Grunfeld's “strategy mix, risk profile and expected performance” in the rates trading space. Schonfeld also thought that Grunfeld was a keeper. He was “a long term addition” who was “capable not only of generating returns through his own trading strategies but also of contributing to the firm’s intellectual capital, and eventually serving as a senior leader within the organisation”.

Quite a glowing tribute from someone who wants to hire you.  Of course, it hits slightly different when the same words appear in a lawsuit, though.  Grunfeld ended up staying at Millennium and Schonfeld are, to say the least, salty about it.

According to the complaint, the hiring agreement contained what looks very like the break-up fee in a merger deal (although Schonfeld seem very keen to emphasise that these would be damages to compensate them for their wasted due diligence, time and opportunity cost rather than being a penalty, presumably for legal reasons).  The sum they’re asking for is $11m, and the lawsuit says that this is “significantly less than the total compensation contemplated under the Employment Agreement, representing only a fraction of Defendant’s anticipated compensation, approximately equivalent to his anticipated Signing Bonus alone”.

It's is serious money. Grunfeld has not yet responded to the complaint and doesn’t seem to be commenting publicly (he didn't respond to our invitation).  But he was apparently represented by lawyers throughout the negotiations with Schonfeld, and this is not his first rodeo – he won an arbitration case over a non-compete agreement with his former employers at Element Capital when he went to Millennium.

And this sort of thing apparently happens all the time in the pod shop world.  Millennium apparently recently enforced a similar clause when Tarun Tyagi decided to accept a bid-back offer from Capula Investment Management, and Schonfeld themselves were sued in 2024 over a case when they successfully recruited Nicolas Monaghan and Thibault Cons from a Swiss hedge fund. The practice of waiting until someone is nearly at the end of their gardening leave, then poaching them to go somewhere different, is so common that it even has a name – the “interception trade”.

Citadel has recently been reorganising its People Team, mainly promoting from within the organisation to replace a string of departures over the last year including Sjoerd Gehring and Eleanor Sharkey.  They have also been hiring sell-side bankers who know the hedge fund space.  It seems like this might be an even more exciting and stressful job than managing the actual money.

Elsewhere, the ethics module of the CFA exams is an important part of the qualification, counting for 15-20% of the Level One qualification and 10-15% of the next two.  The CFA Institute’s Code of Ethics covers important subjects like exactly what to put on your business cards, as well as more basic issues of client confidentiality, money laundering prevention and the like.

So, anyone with a CFA qualification will be aware that you shouldn’t send invoices from your employer to fake consulting companies in order to steal money from them.  What a shame that Michael J Collins, the CFA Institute’s former chief marketing officer, doesn’t seem to have ever taken the exams himself.  Because this week he has pleaded guilty to doing exactly that. He spent nearly $5m from the Institute (and $1m from another employer) on fine dining, travel and an engagement ring, among other purchases.  To rub salt into the wound, he doesn’t seem to have invested any of his criminal proceeds, prudently or otherwise.

Meanwhile …

Tony Kim of Centerview says that companies are reluctant to do deals that might take 18 months to close, in a world where AI might mean the market is very different a year ahead. Instead, they’re doing “LIFT” transactions (license, IP, founders and talent) which don’t need antitrust approval. No indication of how this might affect fees or league table credit. (Bloomberg)

Yiming Zhang was one of the top quants at Jump Trading, spending 17 years there.  When his non-compete period is over (which could be quite a while), he will be starting up as an external manager for Millennium. Presuming that AI hasn’t changed the entire world by then of course. (Business Insider)

JPMorgan is continuing to grow its tech banking team, hiring Kaushik Banerjee and Homan Milani from Bank of America. (Reuters)

There is still an anomaly in the UK tax and benefit system which means that someone with children who earns £149,999 has less disposable income than someone earning £99,999. Junior bankers with ambitions to start a family, beware. (FT)

Tower Research has reserved a company name for an entity in Jersey, although the paperwork suggests that the decision was taken before the Iran war rather than in response to staff in the Gulf getting nervous and wanting an alternative tax and climate favoured location. (Financial News)

The wild story of hedge fund manager Michael Pollack, and the therapist who talked him out of his marriage and a quarter of a million dollars (she denies the allegations) is now the subject of a publishers’ bidding war, which will presumably end up as a movie that makes “Industry” look tame. (Page Six)

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