Early on February 1, 2017, Lawrence Minicone and Zachary Squire officially launched Tekmerion Capital Management, a small systematic macro investment firm backed by former Goldman Sachs partner and Fortress Investment Group principal Michael Novogratz.
Two days later, at 4:25 p.m., a senior client advisor at their former employer, Bridgewater Associates, pressed send on an email to the firm’s in-house counsel.
The subject line: “New Competitor.”
The email contained an attachment — a pitch book from the newly-launched hedge fund — which one of Bridgewater’s clients had sent to that advisor “in confidence,” according to the email. The advisor wrote that they were forwarding the email in case it “wasn’t on [their] radar” that “another ex-Bridgewater employee is setting up a systematic macro hedge fund.”
Minutes later, head of investment analytics Kevin Brennan and co-chief investment officer Greg Jensen were looped into the email chain. At 7:10 p.m., Jensen forwarded the email to Bridgewater founder Ray Dalio. Within 15 minutes, the legendary investor had responded.
Over the course of the next nine months, Bridgewater employees, Squire, and Minicone repeatedly spoke over the phone and in-person, negotiating over Bridgewater’s concerns that the two had breached the confidentiality agreements laid out in their original employment contracts with the massive hedge fund. During that process, Bridgewater requested access to all of Tekmerion’s models and investment methodologies.
But tiny Tekmerion held its ground. And so, in November 2017, Bridgewater began a private arbitration process that has lasted for nearly three years and which recently spilled into public view thanks to court filings.
These filings, to an unusual degree, offer a window into the employment tactics of the world’s largest hedge fund. They, along with interviews with former colleagues, also show the challenges faced by two young ex-employees fighting to start a business despite the protestations of their former employer — a fight that, despite an arbitration court finding that Bridgewater “manufactured false evidence” in order to pursue its claims, continues to this day.
At Bridgewater, Minicone was a member of a two-person team that constructed and maintained Bridgewater’s real-time macroeconomic estimates, according to an early Tekmerion pitch deck that was included in Bridgewater’s demand for arbitration, which was filed with the courts publicly on Thursday.
“He’s a wizard with data,” a former Bridgewater co-worker says of Minicone. “He’s one of the smartest macro thinkers out there.”
At Bridgewater, Minicone would pull late nights to finish his work, the former colleague remembers. The colleague didn’t live in Connecticut, so when they worked late, Minicone would offer up a space to stay in his home so his co-worker wouldn’t have to worry about traveling far.
When they worked together at Bridgewater, the former colleague had a health emergency. Minicone “was the first one to check on me,” the co-worker says. “He organized a few things for me when I got back to the office. It was quite a different response than most people there.”
Zachary Squire, now 34, joined Bridgewater two years later, also as an investment associate. The then-24-year-old had just finished a two-year stint at D.E. Shaw, another legendary hedge fund, as a rotational associate constructing cross-asset risk reports. Squire was on what Bridgewater calls the “Ray Team,” which, according to the pitch deck, supports Dalio’s investment strategy research. Squire also was responsible for generating systematic FX strategies, according to that deck.
Bridgewater regularly gives its investment associates written exams and in-person interviews with senior employees who “try to probe how well people are understanding their role,” a former colleague says. Squire aced one of those assessments, which the source believes is not uncommon, but is exceptional.
“He kind of crushed it,” the former colleague says. “The firm attracts very bright and motivated young people — but he stood out among the group.”
Squire’s academic achievements set the stage for this level of work. He grew up in New York City and, as a child, performed over 200 times in the Metropolitan Opera Children’s Chorus, according to a Princeton University profile from 2008. He was the valedictorian of his all-boys high school on the Upper West Side, and then went on to Princeton, where he majored in Latin and Greek.
Squire was Princeton’s 2008 valedictorian: He received 10 A+ grades in classes like economics, electrical engineering, and geosciences. At the school, he participated in research on quantum cascade lasers and trade policy, winning the J. Wells Henderson Prize for best university-wide undergraduate independent research.
Upon arrival, Squire took to Bridgewater’s culture of transparency and openness quickly, according to the former colleague. He “stood out for being willing to share his thoughts freely,” the source says.
But Bridgewater’s culture of transparency extended into the way it monitors employees, court documents show.
At the hedge fund, both Squire and Minicone were subject to strict rules that help the firm’s facilities remain secure. The two, along with other employees, placed their cell phones into signal-proof lockers when entering work each day, according to the counterclaims they filed to their arbitration panel.
Bridgewater records its employee’s movements by video, and records phone calls, internet communications, and computer access. Files or attachments sent via email externally require explicit approval.
While such security might seem excessive, the firm closely guards its intellectual property — its “edge,” in hedge-fund speak. Additionally, it also attempts to guard its IP through restrictive non-compete contracts — contracts that, as Minicone and Squire would find out, can make leaving Bridgewater particularly painful.
According to the final award document from the arbitration tribunal, Bridgewater objected to several of Squire’s offers before approving a job in London with alternative investment firm HBK Europe Management. Bridgewater also approved Minicone’s move to Castleton Commodities International, a commodities trading firm.
A former co-worker at Castleton remembers Minicone warmly. “He was always ready to help,” the co-worker says. “He had been at Castleton before me, so when I joined, he was very helpful in getting me set up.” Although they worked in different groups, the two sat close together in the office, and forged a friendship that remains intact. “He’s extremely easy to get along with and very welcoming.”
Meanwhile, at HBK, Squire’s responsibilities were growing. He said in his arbitration testimony that at the fund he “owned a trade, end-to-end” for the first time. But with the end of his noncompete looming, Squire began to consider his options for setting out on his own.
He contacted a childhood friend who had previously formed a company; that friend suggested they build a fund using the entity he had previously created. Late in 2015, Squire contacted Minicone, and the two began building investment models, working nights and weekends ahead of launch.
Thus began Tekmerion.
The word tekmerion comes from Ancient Greek — Aristotle’s Rhetoric, to be exact — and means “signal” or “sign.” In formal arguments, the word indicates unquestionable proof. According to Tekmerion’s early pitch deck, “in the context of common parlance, it indicates a boundary stone — a hard physical marker placed on the ground to delineate mine and thine.”
“Tekmerion represents our business and investment philosophy: while pursuing the most sophisticated and rigorous analysis, we must always remain grounded in the hard practicalities of managing our clients’ assets in the real world. Both perspectives are essential to our success,” the early pitch deck says.
Both Squire’s and Minicone’s former co-workers point to this rigor when describing the two.
“He thinks about investments and markets in a very creative way,” says Minicone’s former Castleton colleague. “His knowledge base is both wide and has depth. He looks at relationships across many different markets and really understands how to approach what’s going on in the markets based on what’s going on in the world.”
Squire’s former co-worker — who did not work with him at Bridgewater — shared similar thoughts on his research process.
“He doesn’t rely on the sell-side or anyone else’s work to come up with his ideas,” the co-worker says. “He really looks at how the world works and talks about it with his colleagues.”
Tekmerion trades exchange-listed futures in equity indices, rates, foreign exchange, and commodities, holding investments between several weeks and several months, according to its pitch deck. In its early days, Novogratz backed the firm through his family office.
Soon after the launch, Squire hit the conference circuit. He spoke at the 2017 SALT conference in Las Vegas on a panel with other “rising stars” in the industry. He spoke at the 2018 Context Leadership Summit, and this year at the Asian Financial Forum. Since then, Tekmerion has garnered investments from Alan Howard’s family office and Alpine Select Alternative Fund, a Zug, Switzerland-based investment firm.
The firm’s success, though, was not without struggle. The arbitration between Tekmerion and Bridgewater lasted in secret for more than two years. And it wasn’t the only hardship going on behind closed doors.
The suit, which is still winding its way through the legal system, alleges that male executives at Point72 “flout gender discrimination laws and openly subject their female subordinates to abhorrent bias,” including favoring men for promotions and raises. Bonner, too, has roots at Bridgewater: She worked as a senior manager at the firm from 2010 through 2013.
Amid both the Bridgewater arbitration and Bonner’s suit against Point72, the two married in October, 2019, in Westerly, Rhode Island. “They’re a fun couple,” says Minicone’s former Bridgewater colleague.
But for Tekmerion, fun was scant as the arbitration dragged on and, eventually, spilled into the public domain.
That happened in early July after Tekmerion’s lawyer, Aaron Zeisler — who declined to comment for the story — filed a petition with the Supreme Court of the State of New York. The petition asks the court to compel Bridgewater to pay the legal fees that the arbitration panel had already decided Bridgewater owes Squire and Minicone.
In its ruling, the arbitration panel found that Bridgewater “failed to articulate” the trade secrets it alleged Tekmerion misappropriated and shared no evidence that its trade secrets were “protectable,” according to its final award. The final award also says that Bridgewater “manufactured false evidence” in the arbitration, and pursued the arbitration knowing that Tekmerion would have to disclose it to potential investors.
The arbitration panel also denied Tekmerion’s Connecticut Unfair Trade Practices Act and intentional interference counterclaims, because no evidence showed that Bridgewater had any “inappropriate” contact with Tekmerion’s potential customers or investors. Still, the arbitration panel awarded Tekmerion attorney’s fees and costs to the tune of $1.99 million.
Bridgewater, for its part, is seeking to vacate those fees and continues to argue against the ruling. “An arbitration panel awarded legal fees to the former employees, even though it agreed neither side proved their claims,” the hedge fund said in a statement. “We fundamentally disagree with the inflammatory language from the majority’s decision about Bridgewater’s intentions and motives and refer you to the dissenting view that stated it is an ‘incomplete inaccurate, and one-sided summary of the evidentiary record.’”
Furthermore, despite the court ruling, the firm claims that “Bridgewater did not ‘manufacture false evidence’ or bring this claim in ‘bad faith.’ We take protecting our intellectual property very seriously. In this case, we had good reason to suspect these former employees copied Bridgewater’s IP when it was brought to our attention that their presentation looked like a reconfiguration of their work at Bridgewater. All the Bridgewater people who saw these materials felt this way, and even when an expert hired by the former employees saw that presentation his initial reaction was ‘gosh, these guys probably took their intellectual property.’”
During the arbitration, however, Bridgewater co-CIO Greg Jensen told the panel that the firm’s allegations were not based on seeing Tekmerion’s trading process, but instead “an educated guess,” according to the final award.
Still, the firm is unlikely to walk away from the fight anytime soon. As the documents show, even after a lengthy arbitration, Bridgewater — a $140 billion hedge fund firm — is willing to fight against paying legal fees that are worth just 0.001 percent of its assets under management.
