Billionaire Ray Dalio’s Bridgewater Associates sued two former employees for falsely advertising their new hedge fund firm by exaggerating and misrepresenting their role at Bridgewater, the world's largest hedge fund firm that manages some $160 billion.
Bridgewater Associates sued Howard Wang and Wenquan “Robert” Wu in federal court in Manhattan on Tuesday, saying they tried to publicize their newly-formed hedge fund, Convoy Investments, by lying about their former roles at Bridgewater. Bridgewater claims that Wang and Wu tried to pass themselves off as “former key figures responsible for core aspects of Bridgewater’s business,” but “they were nothing of the sort.” Bridgewater is asking a federal judge to order Wang and Wu stop misrepresenting their role at Bridgewater and pay the hedge fund firm damages.
According to the 19-page complaint Bridgewater filed in federal court in Manhattan, neither Wang nor Wu had any responsibility for managing or overseeing any Bridgewater funds, portfolios or investment strategies and they were never promoted above their entry-level positions at the firm. Wang "was never asked or permitted to in any way manage or oversee any Bridgewater fund," Bridgewater claims. "Nor did he ever make any investment decisions for Bridgewater." In a brief interview, Wang said he has not misrepresented his role at the massive hedge fund firm. “Bridgewater in general has a pretty long history of going after its employees, we didn’t think they would go after us in this case but apparently they are,” Wang said.
Bridgewater says that Wang joined Bridgewater in 2008 as an entry-level junior analyst in the client services department that is responsible for managing the hedge fund’s relationships with clients. Wang left in 2012 and Bridgewater says he told the hedge fund “that he intended to pursue ballroom dancing ‘full time as a competitor.’” Wu joined Bridgewater’s internal finance department in 2007 as a software developer, coding software that calculated Bridgewater’s fees. Wu was later transferred to the core tech department at the hedge fund and dealt with discrete coding projects until he left the hedge fund firm in 2010, telling Bridgewater that he was unemployed and traveling, the hedge fund claims.
In 2013, Bridgewater claims it approved Wang’s request to modify his non-compete agreement with the hedge fund so he could start a small business to manage the savings of friends and family and subsidize his ballroom dancing, but the hedge fund says it was led to believe that Wang would not mimic Bridgewater’s key All Weather fund’s framework.
But Bridgewater claims that Wang and Wu had by the middle of 2012 started to work on launching their own hedge fund, registering Convoy’s web address and incorporating the company in Delaware. After his non-compete expired, Wang told Bridgewater he would be marketing a hedge fund to institutional investors and modifying his investment strategy to place a heavy emphasis on growth and inflation, the stomping grounds of Bridgewater’s All Weather strategy.
After being unable to raise any serious funds, Bridgewater claims that earlier this year Convoy started a publicity campaign based on its founders’ prior affiliation with Bridgewater. “Rather than acquire legitimacy in the investment management and hedge fund worlds on their own, they attempted to poach it from their former employer,’ Bridgewater says in its complaint.
Bridgewater points to an August
“We didn’t misrepresent anything when it comes to advertising or generally speaking with people in terms of our roles at Bridgewater. We fairly and accurately represented our roles,” Wang said in a brief interview. Wang said his role at Bridgewater “was an investment associate role, I was working with investments.”
After the Bloomberg article ran, Bridgewater had a telephone conversation with Wang during which Wang agreed to change some of the language on Convoy’s web site. “They wanted me to tweak the exact wording I used in terms of how I talked about my role there and I agreed to it and that was it,” Wang said. But Bridgewater claims that Convoy continues to say that Wang “spent his career managing portfolios for institutional investors, most recently at Bridgewater Associates.” Bridgewater says that Convoy most recently made such reference to Wang in a federal trademark application Wu filed at the end of August with the U.S. Patent and Trademark Office that contained a Convoy Investments brochure.
Bridgewater also implies in its complaint that Wang and Wu should retract their comments that ran in the Bloomberg article. Bridgewater claims that since the hedge fund firm’s telephone call with Wang, Convoy has taken steps to conceal the vast majority of its web site behind a password-protected client login. Bridgewater declined to comment.
