LONDON (Reuters) - Hedge fund group Brevan Howard, has settled its dispute with co-founder Christopher Rokos and has agreed to help the star trader launch his own investment fund later this year.
The end of the legal dispute, over an unusually long five-year non-compete clause in his contract, comes at a time when macro hedge funds are bleeding cash and many have been forced to shut after nearly four years of mediocre performance.
Brevan Howard, one of Europe’s biggest hedge fund firms that managed more than $30 billion last year, will help Rokos set-up his new business and also take a financial interest in the venture, according to a joint statement on Wednesday.
Alan Howard, who leads Brevan Howard, and Rokos are two of the most successful and high-profile macro fund managers, betting on major economic trends with stocks, currencies, bonds and commodities.
Court documents revealed Rokos, represented by the letter ‘R’ in Brevan Howard, made about $4 billion for Brevan’s main fund between 2004 and 2012 and was paid $900 million during his time there.
Rokos filed a lawsuit in a Jersey court in May last year, after leaving the firm in 2012, claiming the non-compete clause would “atrophy” his skills and his professional reputation would be “irreparably damaged”.
The agreement is a dramatic U-turn after a bitter fight that involved claim and counterclaim by the two parties.
The patch-up comes at a crucial stage for Brevan Howard, which recorded the first ever annual loss in its flagship $24 billion macro hedge fund last year.
The money manager was also forced to shut down two hedge funds last year after poor returns and saw more than $5 billion move out with DW Partners, a credit-focused fund manager that took control of the assets it previously managed in two funds on behalf of Brevan Howard.
THE BIG FIGHT Rokos, 44, an alumnus of prestigious Eton College and Oxford University, became one of the five founding partners of Brevan Howard after leaving Credit Suisse with Alan Howard to start the macro hedge fund in 2002. Other founders were Jean Philippe Blochet, James Vernon and Trifon Natsis. Since leaving the hedge fund, he spent time running a family office in London.
In the statement on Wednesday, he was described by Howard, as “an exceptional trader” while Rokos said: “I look forward to a regular dialogue with Alan, something I have valued greatly ever since we started working together.”
The settlement follows last week’s unexpected surge in the Swiss franc which hurt many macro hedge funds in the $3 trillion hedge fund industry. Analysts said the return of Rokos will ease the drought of launches in the region and also end a distraction for Brevan Howard.
Hedge fund firms including Fortress, COMAC Capital and Everest Capital suffered deep portfolio losses last week, a setback for macro hedge funds that collectively saw net outflows worth about $28 billion last year, data from HFR showed, compared with $76.4 billion in net inflows for the industry as a whole.
Reporting by Nishant Kumar, editing by Elaine Hardcastle