Two Sigma loses state pension money as co-founder rift goes public

Overdeck divorce trial could force sale of Two Sigma stake

The State of Wisconsin Investment Board, an agency overseeing more than $178 billion in assets, disclosed over $1 billion invested in Two Sigma funds at the end of 2023 before fully redeeming after the co-founder rift became public, according to the agency’s disclosures and people familiar with the matter. This past summer, the Public Employees Retirement Association of New Mexico redeemed its entire investment of roughly $100 million from a Two Sigma fund. PERA, which manages retirement plans for about 100,000 active members and retirees across New Mexico, said at an August board meeting that “organizational concerns have created uncertainty and there is no credible resolution timeline,” according to minutes of the meeting reviewed by the Journal.

Other institutional investors have trimmed their exposure as well. By the end of 2024, the pension plan of candy and snacks maker Mars Inc. redeemed about one-quarter of the roughly $70 million it had invested, according to disclosures reviewed by fund-data tracker Old Well Labs. Earlier in 2026, Albourne, a hedge-fund gatekeeper that advises institutions where to invest their money, lowered its rating on Two Sigma, people familiar with the matter said.

The exits sit against a backdrop of strong fund performance. Two Sigma’s Absolute Return Enhanced fund gained about 16% through September of this year, and the firm has raised about $4.5 billion in net new money during 2026, according to a person familiar with the matter. A Two Sigma spokeswoman said assets under management are at a record high, investor demand remains strong, and the current year’s performance ranks among the firm’s best. “We have been open with our investors about the disagreements between our co-founders and the resulting challenges,” she said.

The relatively few departures reflect the firm’s structure: most investors can cash out monthly, making them comfortable sticking around, and most top quant funds are closed to new capital, leaving clients with few places to go. Even so, Overdeck testified in his divorce case that, even though Two Sigma’s assets under management increased since his disputes with Siegel became known, the disputes did cause redemptions.

The co-founder dispute has run alongside Overdeck’s divorce. Laura Overdeck filed for divorce in March 2022, citing irreconcilable differences; the couple did not have a prenuptial agreement. John Overdeck has offered her $723 million to settle their nearly 24-year marriage, a figure she disputes as too low. Laura Overdeck, who held a degree in astrophysics and an M.B.A., had stopped working to be a stay-at-home mother and author in Short Hills, N.J.; the couple had three children, and her husband later testified that he tried to stay involved, coaching the kids’ sports teams and limiting work on weekends.

In an Aug. 19 appearance in a New Jersey family court, with Laura watching from a few yards away, the 56-year-old Overdeck testified that “maintaining voting parity with Dr. Siegel is a principal concern.” His wife is seeking a cash payment equivalent to 35% of his stake in Two Sigma, or about $2.2 billion based on her lawyers’ estimate of the firm’s value. Being forced to liquidate that much of his stake to raise cash could tip control of the firm into Siegel’s favor. At one point, Laura Overdeck accused her child’s fencing coach of being John Overdeck’s “paramour,” insinuating their relationship was a reason her marriage ended, according to a defamation lawsuit the fencing coach filed; Laura Overdeck did not respond before the lawsuit was dismissed.

The discovery process of the divorce case turned up evidence that Laura accessed files from John’s computer sitting on a desk in their home and photographed some documents, Judge Bruce Buechler said at an April hearing; the judge cited that as one reason for not allowing her to testify or introduce her own witnesses in the divorce trial. Laura Overdeck also contacted Siegel, hoping her lawyers could depose him, partly to try to show that her husband’s Two Sigma stake is worth more than he claimed. She sent Siegel 700 pages of documents, including photographs from her husband’s computer, John Overdeck’s lawyers said in a June court filing. His wife’s lawyers countered that divorce proceedings are supposed to be public.

Laura Overdeck’s lawyers pressed the court to make public various Two Sigma governance and financial records as part of the divorce proceedings, a move John Overdeck opposed on the grounds that any release could supply ammunition to Siegel. At a hearing, Judge Buechler noted: “The court is presiding over a divorce trial between Laura Overdeck and John Overdeck. It is not presiding over a trial between, by way of example, Dr. Siegel and Mr. Overdeck.” In his August testimony, Overdeck said he worried that any private Two Sigma information becoming public could give Siegel grounds to sue him for breaching his duties to the firm, and that more legal disputes could make investors question the firm’s ability to operate as it had in the past. “I am concerned that large investors in the company would consider reducing their investment…given the large volume of press and conflict,” he said.

In court earlier this month, an expert witness called by John Overdeck valued his stake in Two Sigma entities at about $50 million at the time of the 2002 marriage and around $4.5 billion at the time of the divorce filing. The disclosure prompted Judge Buechler to close the courtroom during part of the testimony. “It deals with projections and the information with regard to where the various Two Sigma entities are going, what they’re looking at, what they’re investing in, which is what I think some of the people sitting here are hoping they’ll get to hear,” the judge said.

Overdeck and Siegel co-founded Two Sigma in 2001 after working together in the 1990s at the quant hedge-fund firm D.E. Shaw Group. Overdeck, a math prodigy who once worked at Amazon as Jeff Bezos’s technical assistant, presided over the firm’s quantitative researchers, designing blueprints for trades. Siegel, a computer scientist with a Ph.D. from the Massachusetts Institute of Technology, led the engineering teams that built the underlying systems. The pair had worked together in the 1990s at D.E. Shaw Group, where Overdeck met Laura. He proposed to her on the spring equinox of 2002, a few weeks before Two Sigma started investing with about $27 million in capital. By the time they married that October, Two Sigma’s assets under management had shot up to about $350 million.

The co-founders tried to promote a culture of nerdy comity, pitching Two Sigma as the “best place for nice geeks to work.” Under Two Sigma’s original operating agreement, Overdeck and Siegel needed to reach consensus on most decisions; for years that did not matter much because the two got along well enough, and employees often spotted them having lunch at a Mexican restaurant near the firm’s headquarters in Manhattan’s SoHo neighborhood. At his divorce trial, Overdeck used a soccer analogy to describe the division of labor between Siegel and himself. “I would liken the trading and modeling to the striker, or the guy who kicks the ball in the goal at the end of the play,” he said. “Investment management is very much a team sport. I was managing the very offensive end of the field.”

Over time, they began to clash over decisions and over who deserved credit and recognition for Two Sigma’s successes. Employees got used to walking on eggshells if there was a risk that Overdeck or Siegel could perceive a slight, people familiar with the matter said. Planners of events agonized over which of the two should be asked to make opening or closing remarks, wondering if either would see one slot as inferior to the other, one of those people said.

When the Covid-19 pandemic hit, the relationship deteriorated further, former employees said. A lengthy work-from-home period allowed conflicts to fester. Overdeck’s team of modelers and Siegel’s team of engineers bickered over how the bonus pool would be divided and which group’s job openings would take priority among Two Sigma’s recruiters. Around 2022, Overdeck and some of his allies at the firm, including general counsel Matt Siano, drafted a proposal for Siegel to step aside because the status quo was untenable, people familiar with the matter said; the document, internally known as the “manifesto,” did not land well.

By 2023, the dispute reached a boiling point. Overdeck and Siegel each needed to sign off on senior executives’ compensation, resulting in some bonus payments being held up. The firm’s annual filing that year with the SEC cited the relationship between Overdeck and Siegel as a material risk, saying management could not agree on the leadership structure of various teams or on the responsibilities of various C-suite executives, and that the disagreements affected the firm’s ability to retain and attract employees, including senior ones. One trigger for the disclosure was an inability to agree on a replacement for operations chief Jonathan Hitchon, who retired in 2023 and had served as a kind of diplomat between Overdeck and Siegel. After months of gridlock, Two Sigma named two interim co-COOs, one of them Siegel’s college roommate, and later named co-general counsels to succeed Siano.

In August 2024, Two Sigma announced that Overdeck and Siegel would cede their co-CEO roles while remaining the firm’s co-chairmen, with a two-person management committee assuming day-to-day responsibilities. Each of them chose someone seen as loyal. Overdeck picked Carter Lyons, an investor-relations executive who had been serving as Two Sigma’s chief business officer. Siegel chose Scott Hoffman, a former M&A lawyer and old friend. Lyons and Hoffman became co-CEOs.

The arrangement did not last. Overdeck appointed himself to the two-person management committee in March 2025, though Lyons remained co-CEO. Hoffman resigned about a year later, citing “ongoing governance challenges since Mr. Overdeck’s return,” according to a firm filing earlier this year. Siegel designated Seth Platt, who had previously served as chief investment officer of Siegel’s family office, to take Hoffman’s spot on the management committee — and accordingly serve as co-CEO, Platt believed. Platt, perceiving that Lyons undermined his authority, tried to fire Lyons. Overdeck invoked his right to move the dispute into a formal resolution process. “Accordingly, whether Mr. Platt also will serve as co-CEO is in dispute,” Two Sigma said in a regulatory filing.

In August, Platt countered with a demand for arbitration asking the panel to declare him the co-CEO, according to an investor letter reviewed by the Journal. Siegel separately brought a new arbitration claim against Overdeck accusing him of breaching his fiduciary duty and having “undisclosed professional and financial conflicts of interest,” the letter said. At issue was Overdeck’s hiring of Siano as a consultant for his family office while Siano was in arbitration against Two Sigma over his deferred compensation and severance, according to the letter and people familiar with the matter.

In an August letter to investors, Two Sigma sought to keep the divorce separate from the firm. “We recognize that recent media attention has extended to John Overdeck’s divorce trial, and we expect it to continue,” the firm said. “This is a personal matter and we are not a party to those proceedings.”