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Verition Fund Management LLC
Company typePrivate
IndustryInvestment management
FoundedOctober 2008; 16 years ago (2008-10)
Founders
  • Nicholas Maounis
  • Josh Goldstein
HeadquartersGreenwich, Connecticut, U.S.
Key people
Nicholas Maounis (CEO)
AUMUS$10.1 billion (July 2024)
Number of employees
350+ (June 2024)
Websiteverition.com
Footnotes / references
[1]

Verition Fund Management (Verition) is an American multi-strategy hedge fund management firm headquartered in Greenwich, Connecticut. It has additional offices in Europe and Asia.

It was founded by Nicholas Maounis after his previous firm Amaranth Advisors went bankrupt.

Background

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After the collapse of Amaranth Advisors, its founder Nicholas Maounis worked on founding a new firm to initially manage his wealth. In October 2008, Maounis and Josh Goldstein, the Chief Operating Officer of Maounis' family office founded Verition and initially it had 19 employees. The name Verition is derived from Veritas, the Latin word for truth. Maonius hired several ex-Amaranth employees and by 2010, three of Amaranth's four partners were working at Verition. To prevent a repeat of Amaranth, Verition added risk controls and hired risk management specialists to monitor trading risks daily.[2][3][4][5]

In September 2021, Verition reopened the fund to investors but increased the lockup period from one year to three years. At that time according to Bloomberg News, Verition since inception never had an annual loss and in 2020 had a return of 30.4% which was higher than the 9.5% average among hedge funds.[4][5] In the same month Verition started expanding its presence in Asia by opening offices in Hong Kong and Singapore.[6]

Verition trades similar strategies to its peers but finds more esoteric bets within them, such as financial transmission rights. In addition it has a higher ratio of Portfolio managers to capital which would lead to more smaller bets rather than a few concentrated large bets.[5]

Controversies

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Valuation expert lawsuit

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Verition was a sizable owner of AOL stock in 2015 when it was acquired by Verizon for $4.4 billion, or $50 per share. Verition questioned the price in the Delaware Court of Chancery arguing AOL had sold itself too cheaply and thus had deprived shareholders of a bigger payoff. Finance experts were hired by Verizon and Verition to evaluate AOL's price with Verizon and Verition aiming for the lower and higher ones respectively. Verizon hired Daniel Fischel of Compass Lexecon who came up with a share price of $44.85 while Verition hired Bradford Cornell of Coherent Economics who came up with a share price of $68.98.[7]

In 2018, Judge Sam Glasscock III ruled in favour of Verizon with intermediate value of $48.70, which was later reduced to $47.08. This was a blow to Verition, which calculated its loss at $25.2 million. Glasscock stated in his ruling that he questioned Cornell's impartiality and tossed out his estimate.[7]

It was revealed that Cornell, who was previously with Compass Lexecon, intended to represent Verizon initially but was passed over for Fischel. He later left to join Coherent Economics and would represent Verition. In an email to Fischel, Cornell stated Verition had a lousy case. The conflict of interest was not disclosed to Verition beforehand.[7]

In December 2018 Verition sent a letter threatening legal action against Cornell and Coherent Economics for damages stating it was "fraudulently induced" to enter into the contract with Coherent and demanded the full $35.7 million it says it lost (including interest).[7] However, before Verition could sue, Cornell and Coherent Economics launched lawsuits against Verition first with Verition launching its own lawsuit to dismiss them. The courts ruled in favour of Verition to dismiss the lawsuits.[8]

Employee lawsuit

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In April 2023, Jump Trading pursued legal action to prevent one of its former traders from joining Verition citing he had trade secrets related to algorithmic trading. The trader who had left Jump Trading in March 2022 was under a non-compete clause to not work in the field until April 2024.[9]

After failing to block the trader twice, Jump Trading reached a settlement with Verition in November 2023.[10][11]

References

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  1. ^ "Form ADV" (PDF). SEC. Archived (PDF) from the original on June 24, 2023. Retrieved September 11, 2024.
  2. ^ Strasburg, Jenny (June 26, 2010). "Former Amaranth Chief Returns to the Stage". The Wall Street Journal. Archived from the original on June 24, 2023. Retrieved September 11, 2024.
  3. ^ Burton, Katherine (October 14, 2010). "Maounis Hires Former Amaranth Colleague for Two-Year-Old Fund". Bloomberg.com. Retrieved September 11, 2024.
  4. ^ a b Kumar, Nishant (September 7, 2021). "Hedge Fund Verition Opens to Cash for Patient Investors Only". Bloomberg.com. Archived from the original on April 30, 2023. Retrieved September 11, 2024.
  5. ^ a b c Morrell, Alex (May 8, 2024). "These are the top business-development execs competing to hire elite portfolio managers at hedge fund giants Citadel, Millennium, Point72, and more". Business Insider. Archived from the original on September 11, 2024. Retrieved September 11, 2024.
  6. ^ Hu, Bei (September 30, 2021). "U.S. Hedge Fund Verition Plans Singapore Office, Eyes Hong Kong". Bloomberg.com. Retrieved September 11, 2024.
  7. ^ a b c d Hiltzik, Michael (February 19, 2019). "Column: A Caltech expert allegedly ruined his client's $30-million lawsuit by hiding his grudge against the other side". Los Angeles Times. Retrieved September 11, 2024.
  8. ^ "Coherent Economics, LLC v. Verition Partners Master Fund, Ltd. et al, No. 1:2018cv08376 - Document 32 (N.D. Ill. 2020)". Justia Law. Retrieved September 11, 2024.
  9. ^ Trivedi, Upmanyu (April 28, 2023). "Quant Fund Sues a 'Special' Trader Leaving for Rival With its Algo's Secrets". Bloomberg.com. Retrieved September 11, 2024.
  10. ^ "Hedge Fund Settles Fight Over Hire's Non-Compete Contract - Law360". www.law360.com. Archived from the original on September 11, 2024. Retrieved September 11, 2024.
  11. ^ Trivedi, Upmanyu (November 8, 2023). "London Quant Rivals Trade Accusations Over Star Trader and Strategies". Bloomberg.com. Retrieved September 11, 2024.
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