Senate Panel to Examine Renaissance Trading Strategy

Peter Brown, the co-chief executive of Renaissance Technologies, is scheduled to testify on Tuesday before a Senate panel hearing into a trading strategy that helped the firm pay lower taxes.

Representatives from Barclays and Deutsche Bank have also been called to the hearing by the Senate Permanent Subcommittee on Investigations in Washington, according to a statement on Friday.

The subcommittee, led by Senator Carl Levin, Democrat of Michigan, has been investigating tax-avoidance strategies by large United States companies like Apple and Caterpillar.

During the hearing, Mr. Levin and Senator John McCain of Arizona will examine a series of transactions that used financial engineering and complicated financial products to help reduce taxes on short-term capital gains.

These transactions, called basket options, were intended to give Renaissance Technologies more leverage than is typically available to hedge funds, two people familiar with the products but not authorized to speak publicly said.

“We believe that the tax treatment for the option transactions being reviewed by the P.S.I. is appropriate under current law,” Jonathan Gasthalter, a spokesman for Renaissance Technologies, said in an emailed statement. He added that Renaissance has cooperated with another review by the Internal Revenue Service into the transactions.

“Renaissance looks forward to assisting the committee on Tuesday,” Mr. Gasthalter said.

Renee Calabro, a spokeswoman for Deutsche Bank, declined to comment. Kerrie Cohen, a spokeswoman at Barclays, also declined to comment.

Mr. Brown, who has been among the highest earners in the hedge fund industry, according to a survey by Forbes, will testify on a panel with Gerard LaRocca, a top executive at Barclays Americas, and M. Barry Bausano, the president of Deutsche Bank Securities.

Other executives who will testify next week include Mark Silber, the chief financial officer and chief compliance officer at Renaissance Technologies, and Martin Malloy, a managing director at Barclays in London.

Renaissance Technologies is a hedge fund based in East Setauket, N.Y., and was founded in 1982 by a former mathematics professor, James H. Simons. The firm is known for using computer and mathematical models to spot mispricings in the market. Mr. Simons, who received a doctorate in math at 23, is now retired but remains nonexecutive chairman.