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Former D.E. Shaw star Daniel Michalow opens up about his victory in $52 million defamation suit

Pensions and Investments reached out to D.E. Shaw for comment about what investors should make of the findings of the case. A spokesman for the firm declined to answer any questions and provided the following statement: “We were disappointed by the outcome of the arbitration, and we stand by the decision we made in 2018 to terminate Mr. Michalow’s employment with the firm.”

Despite the effort it took to prove his innocence, Mr. Michalow takes a philosophical view of what happened.
“People always ask me why they did it,” Mr. Michalow said. In his opinion: “The business motives at least were to protect intellectual property, deter competition, and discourage other employees from leaving. I think there were also psychological motives. At the end of the day, companies are run by people.”

Mr. Michalow has focused on personal interests and philanthropy work alongside his case and has not been involved in financial services work since 2018.

“For four years, they refused to admit publicly that I had not sexually harassed anyone. The panel had to say it in its ruling because D. E. Shaw would not do so,” he said.

As of this writing, the executive committee members involved have retained their roles, despite being named in the complaint.

Mr. Michalow notes that of the four men included in the complaint, some were more involved than others. “To be fair, some members of the executive committee were much more responsible for what happened than others,” he said. “Eric Wepsic, as far as I could tell, was the least involved. I respect Eric. He is the real brains behind the firm’s quant success and one of the great hedge fund investors of all time.”

With the case closed, Mr. Michalow now is considering what comes next.

He said he learned a lot from this process and has created his own private foundation to support “truth and justice.” He’s also made moves to divest his financial interests in D.E. Shaw. He understands the questions raised by his case but is also quick to point out that the firm has continued to perform well for investors despite personnel concerns.

“The firm is great at managing money and has done a fantastic job capitalizing on recent market dynamics,” he said. “Personally, I redeemed my investments after what they did, but that was because I did not want anything to do with the executive committee and because I wanted to trade my own money.”

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