Analysis
Largest Tax Settlement In U.S History; James Simon And Key Executives Of Hedge Fund Renaissance To Pay $7bn In Taxes, Penalties
- In the largest tax settlement in U.S's history, top executives at Renaissance Technologies, a New York-based hedge fund, have agreed to pay $7bn in back taxes and penalties to the federal authorities.
- The founder of the firm, James Simon, was an pioneering figure in the investment industry and ushered in a quantitative revolution that has swept the world of trading. A former mathematics professor and code breaker, Simon built Renaissance in to one of world's most successful hedge funds using machine language driven predictive models capable of uncovering unrecognized trading patterns.
James Simon
In the largest tax settlement in U.S's history, top executives at Renaissance Technologies, a New York-based hedge fund, have agreed to pay $7bn in back taxes and penalties to the federal authorities, Financial Times reported.
The settlement ends a long-running between the hedge fund firm and tax authorities over tax treatment of earnings from the firm's flagship fund Medallion. Executives at the hedge fund converted short-term capital gains in to long-term profits, which are taxed at a lower rate.
James Simons, the founder of Renaissance Technologies, will make an “additional settlement” payment of $670 million to the Internal Revenue Service (IRS), and will also pay back taxes related to his gains.
In January this year, Simon, an pioneering figure in the investment industry, who ushered in a quantitative revolution in the world of trading, stepped down as chairman of Renaissance. Though the hedge fund firm has been recently facing troubles and size of the fund had shrunk to $60 billion, it blazed a glorious trial for over 3 decades.
The Wall Street Journal described him as "World's Greatest Investor". According to the report, "since 1988, his flagship Medallion fund has generated average annual returns of 66% before charging hefty investor fees—39% after fees—racking up trading gains of more than $100 billion."
A former mathematics professor and code breaker, Simon built Renaissance in to one of world's most successful hedge funds using machine language driven predictive models capable of uncovering unrecognized trading patterns.
While Simons was a big supporter of Democratic party and donated to the presidential race of Joe Biden and Hillary Clinton, his co-founder at Renaissance, Robert Mercer, was one of the key backers of President Donald Trump. He was also a major funder of U.S media platform Breitbart.
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