Ray Dalio’s $US160 billion hedge fund behemoth Bridgewater Associates is suing two former employees for allegedly “lying to the market about their former roles” while marketing their new hedge fund to investors, according to a complaint filed last week in US District Court for the Southern District of New York.
Bridgewater’s complaint alleges that Wenquan “Robert” Wu and Howard Wang — the founders of Convoy Investments — both lied about their roles at the Westport, Connecticut-based firm.
“Despite having served in only low-ranking roles at Bridgewater with limited responsibility, Mr. Wu and Mr. Wang have tried to pass themselves off in several public forums as former key figures responsible for core aspects of Bridgewater’s business,” the complaint states.
According to Bridgewater, they were both low-ranking, junior-level employees who worked for a couple of years in Information Technology and Client Services, respectively.
Bridgewater claims that after they confronted Wu and Wang, the two men took down some, but not all, of the statements about their roles.
Wu’s bio on Convoy’s site currently states that he was part of Bridgewater’s operations team. His
Linkedin page states that at Bridgewater he “was part of a small team that built and oversaw components of back office systems.”
Both of those profiles mention that Wu is a CFA charterholder. We were unable to locate any records listed under his name in the CFA member directory.
Wang’s bio on Convoy’s site says that he “spent his career managing portfolios for institutional investors, most recently at Bridgewater Associates where he and Robert first met.” His bio also says that he was “part of the investment associates team working with some of the largest and most sophisticated investors in the world, including sovereign wealth funds, pensions, endowments and foundations.” Wang’s LinkedIn profile also says pretty much the same thing.
Bridgewater also claims Wu and Wang “kept their competitive ambitions hidden — telling Bridgewater that they were ‘travelling,’ ‘ballroom dancing,’ and only passively advising ‘friends and family’ on how to invest their money.” After the non-compete period was up, Bridgewater said “they began marketing Convoy as ‘a global macro investment hedge fund’ that caters to the very clients Bridgewater has successfully serviced for years.”
Bridgewater is seeking to have Wu and Wang cease making these allegedly “false advertising claims.” The hedge fund is also seeking to recover unspecified damages.
Convoy Investments made headlines earlier this year for operating as a hedge fund that wouldn’t charge a performance fee. Instead, they’re only charging a 1.25% management fee.
It was a pretty radical approach to the hedge fund compensation structure commonly known as the “2 and 20,” which stands for a 2% management fee for total assets under management and a 20% performance fee charge for any profits. “2 and 20” is the standard in the industry (that’s what Bridgewater uses), but those numbers can vary from fund to fund.
In recent years, it has become harder for fund managers to justify the fee structure, especially because most funds have been underperforming the broader market.
Wu and Wang declined to comment. A spokesperson for Bridgewater also declined to comment.
Here’s the complaint: