Key Takeaways
- • Brevan Howard has settled its legal dispute with co-founder Christopher Rokos and agreed to help him launch his own investment fund later in 2015, according to a joint statement issued on Wednesday.
- • Brevan Howard will assist Rokos in setting up the new business and will take a financial interest in the venture.
- • The dispute centered on an unusually long five-year non-compete clause in Rokos' contract, which he challenged in a Jersey court in May 2014 after leaving the firm in 2012.
- • Court documents showed Rokos generated about $4 billion for Brevan's main fund between 2004 and 2012 and was paid $900 million during his tenure.
- • The settlement comes as Brevan Howard, which managed more than $30 billion last year, recorded its first ever annual loss in its $24 billion flagship macro fund and lost more than $5 billion to DW Partners.
Summary
Brevan Howard, one of Europe's largest hedge fund firms, has settled its dispute with co-founder Christopher Rokos and agreed to help the macro trader launch his own investment fund later this year, according to a joint statement issued on Wednesday, as reported by Reuters. The firm will assist Rokos in establishing the new business and will take a financial interest in the venture.
The dispute centered on an unusually long five-year non-compete clause in Rokos' contract. Rokos filed suit in a Jersey court in May 2014, after leaving Brevan Howard in 2012, arguing that the clause would "atrophy" his skills and cause his professional reputation to be "irreparably damaged." The resolution marks a sharp reversal after a contentious fight involving claims and counterclaims from both sides.
Court documents disclosed that Rokos, who is represented by the letter 'R' in the firm's name, generated about $4 billion for Brevan's main fund between 2004 and 2012 and was paid $900 million during his time at the firm. Rokos, 44, is an Eton and Oxford alumnus who became one of five founding partners of Brevan Howard when it was established in 2002 alongside Alan Howard, after both left Credit Suisse. Other founders included Jean Philippe Blochet, James Vernon and Trifon Natsis. Since leaving, he ran a family office in London. Alan Howard described him as "an exceptional trader," while Rokos said he looked forward to "a regular dialogue with Alan."
The settlement arrives at a difficult juncture for Brevan Howard, which recorded its first ever annual loss in its flagship $24 billion macro fund last year. The firm also shut two hedge funds after poor returns and saw more than $5 billion transfer to DW Partners, a credit-focused manager that took over the assets it had previously run in two Brevan Howard funds.
The agreement also comes amid broader pressure on macro managers. Reuters noted that many such funds have struggled through nearly four years of mediocre performance, and that macro hedge funds collectively saw net outflows of about $28 billion last year, according to HFR data, versus $76.4 billion in net industry-wide inflows. Analysts quoted by Reuters said Rokos' return would ease a drought of launches in the region. The settlement followed a sudden surge in the Swiss franc the previous week that hurt macro funds, including losses at Fortress, COMAC Capital and Everest Capital.
The dispute centered on an unusually long five-year non-compete clause in Rokos' contract. Rokos filed suit in a Jersey court in May 2014, after leaving Brevan Howard in 2012, arguing that the clause would "atrophy" his skills and cause his professional reputation to be "irreparably damaged." The resolution marks a sharp reversal after a contentious fight involving claims and counterclaims from both sides.
Court documents disclosed that Rokos, who is represented by the letter 'R' in the firm's name, generated about $4 billion for Brevan's main fund between 2004 and 2012 and was paid $900 million during his time at the firm. Rokos, 44, is an Eton and Oxford alumnus who became one of five founding partners of Brevan Howard when it was established in 2002 alongside Alan Howard, after both left Credit Suisse. Other founders included Jean Philippe Blochet, James Vernon and Trifon Natsis. Since leaving, he ran a family office in London. Alan Howard described him as "an exceptional trader," while Rokos said he looked forward to "a regular dialogue with Alan."
The settlement arrives at a difficult juncture for Brevan Howard, which recorded its first ever annual loss in its flagship $24 billion macro fund last year. The firm also shut two hedge funds after poor returns and saw more than $5 billion transfer to DW Partners, a credit-focused manager that took over the assets it had previously run in two Brevan Howard funds.
The agreement also comes amid broader pressure on macro managers. Reuters noted that many such funds have struggled through nearly four years of mediocre performance, and that macro hedge funds collectively saw net outflows of about $28 billion last year, according to HFR data, versus $76.4 billion in net industry-wide inflows. Analysts quoted by Reuters said Rokos' return would ease a drought of launches in the region. The settlement followed a sudden surge in the Swiss franc the previous week that hurt macro funds, including losses at Fortress, COMAC Capital and Everest Capital.
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