Hedge fund Two Sigma in $100M settlement talks with SEC, WSJ reports

Hedge fund Two Sigma will likely have to pay up to $100 million to settle a U.S. Securities and Exchange Commission investigation into a trading scandal at the company, the Wall Street Journal reported Thursday.

The US hedge fund is likely to be held accountable for how it oversaw a former employee at the center of the misconduct, which led to hundreds of millions of dollars in losses and profits, the report added, citing people familiar with the matter.

The researcher allegedly altered trading patterns without authorization. Two Sigma and the regulator are in talks, and the result could be a lower payout for the firm, the people added.

The SEC did not immediately respond to a Reuters request for comment. A spokesman for Two Sigma declined to comment on the matter.

Two Sigma co-founders John Overdeck and David Siegel decided to step down as CEOs in August.

The hedge fund, with $60 billion in assets under management, disclosed in a regulatory filing last year that a rift among its top managers posed governance challenges and a significant risk to the firm.

Both Overdeck and Siegel, who founded Two Sigma in 2001, are set to continue as co-chairs.

(Reporting by Biswas in Bengaluru; Editing by Krishna Chandra Eluri and Nick Zieminski)