VERY DETAILED TIMELINE – Renaissance Technologies, James Simons, Robert Mercer & the Medallion Funds

Note – on 14 May 2017, Scott Christianson died from Blunt force injuries after the bannisters gave way at his house shortly after publishing an exposee on Robert Mercer for McClatchy news service.

“Christianson, 69, died from massive head trauma after falling down the back stairs of his home. His wife, Tamar Gordon, said the banister had given way.[…] Christianson had recently begun working for the investigative unit of the McClatchy news service. Just two weeks ago, he and his McClatchy colleague Greg Gordon published a comprehensive investigation on the ties between President Donald Trump and the hedge-fund mogul Robert Mercer.”.

There are (statitically) an unusually high number of unexpected deaths/murders/suicides connected with RenTech – see below.

KEY THEMES/RISK FACTORS

• James Simons was briefly a cryptographer working with the US defence community before being fired for his anti-Vietnam war insubordination and speaking with the press. He made his money initially via an investment in Colombia, whose investors then continued into his Limroy fund, a pre-cursor to the Medallion funds. He recruited staff to the fund who didn’t work on wall street, and kept his back and middle office separate from his front office. This latter point can be a risk factor & first point is a risk factor if you have employees leave claiming you’ve asked them to obtain confidential information for trading…
• 2 Russians left claiming what RenTec was asking them to do was to obtain confidential information and trade on it (http://www.zerohedge.com/article/time-revisit-rentecs-allegedly-illegal-dark-pool-limit-order-and-swap-transaction-strategies) . No journalist, regulator or oversight committee has actually got the actual answer of what was being asked of them – or Why RenTec continued to pursue them legally, and why Regulators didn’t ask why…

“Money has also threatened to destroy the family atmosphere. In 2001, Renaissance hired a Russian scientist who, like many of his peers, came west after the collapse of the Soviet Union: Alexander Belopolsky. Patterson was against bringing him aboard, he says, because he had recently worked on Wall Street, where he had job-hopped. His fears proved prescient. In 2003 he and another Russian, Pavel Volfbeyn, announced they were leaving for hedge fund Millennium Partners, where they’d negotiated healthy bonuses and the right to keep a large part of their own profits. Renaissance sued them and Millennium, worried the researchers would take the firm’s secrets with them. All parties later settled out of court.”

• Also intriguing – what was the Russian equity power play…

“Around that time another of Renaissance’s Russian-born researchers, Alexey Kononenko, who received his Ph.D. from Penn State in 1997 and had also done a brief stint on Wall Street, was promoted within the equities group. Senior staffers ended up discussing Kononenko’s advancement during one of their regular dinners at Simons’s house. One person familiar with the situation says the scientists were just questioning why he had moved ahead of colleagues who had been there much longer, much the way an academic might complain about a younger colleague getting tenure. Other people with knowledge of the firm say Kononenko’s promotion was a significant event in Renaissance’s history and that the Russian had actually executed a power play.”

• RenTec’s Russian Vimpelcom transaction has been flagged to me consistently as a problematic transaction. I would welcome feedback. Note Vimpelcom’s connections to all the key players in #TrumpRussia in the 2008 Alfa Bank bail-out sections I’ve included.
• The 2 portfolio managers for Nova Fund LP – the fund closed by the FINRA breaches for failure to have adequate audibility of the trades, are not fired – they instead become Co-CEOs. This is odd. Simons looks like he takes the fall, leaving in 2009 after all the regulatory inspections, for their mistake. Normally you’d fire people who’d attracted that much regulatory attention. An interesting point, is that those 2 Russians were recruited around the same time Nova Fund was being established… (and note the back story on Millennium Partners LP by the way, among others – https://www.sec.gov/litigation/admin/33-8639.pdf)

In terms of just incredibly poor values

• RenTec was considered by the IRS (see the GLAM) and one of its banks who read that memo to be trading illegally for tax purposes – a point I can’t see the IRS has resolved (and at a minimum, USD50m donated by Mercer/Simons in election season 2016, is likely a cheap tax deferal strategy based on the numbers here…)
• By precis’ing one of the banks – using the bank to run an unregulated fund on their behalf – RenTec was avoiding the laws put in place to avoid having too much leverage in the financial system. This is an important rule – as when large Hedge Funds go bust, if there is too much leverage – the Bank, its depositors, and ultimately the Government take the risk. (See “The Naked Short Scam” below, which I think refers)
• The points about “journaling” and allocating trades from one client to another I find startling from a legal/regulatory point of view. ACCOUNTING & OTHER VIEWS WELCOME.

Other Issues:

• Colombian business – Left out of modern articles in the genesis of James Simons fortune – the Colombian tile company, its investors (including Jimmy Meyer and Edmundo Esquenazi) and the Limroy fund that they all participated in, as well as in Jimmy Meyer’s case – the Madoff affair…
• Madoff a number of senior RenTech partners (Paul Broder, Chief Risk Officer, Henry Laufer, Chief Scientist, Nathanie, Nat Simons (son of Jim) and portfolio manager of Meritage Fund a sister fund of RenTech), were interviewed in the OIG report into the failure of the SEC to uncover the Madoff ponzie scheme here. What is particularly interesting is the extent of RenTech’s trading with Madoff was not pursued by the SEC – “Of course ALL of our trades are with Madoff as the principal – so our option positions are OTC with Madoff so he can choose to use any strike, and any total volume he chooses, but the risk must be covered somewhere if he is doing the trades at all?”
• The OIG report is generally favourable to RenTech especially on why they didn’t tell the SEC of their discovery. Indeed the OIG report is cited in Pickard’s litigation here, vs Legacy Capital and Khronos LLC. Particularly important points “Legacy is a British Virgin Islands corporation that functioned as a single purpose vehicle to invest in BLMIS. (¶¶ 32–33.) Jimmy Mayer controlled Legacy’s BLMIS account, and his son, Rafael Mayer (“Rafael”), was an officer of Legacy. (¶ 33.) Khronos is a New York limited liability company co-founded by Rafael and David Mayer, both of whom serve as managing directors. (¶¶ 30–31.) Khronos provided accounting services to Legacy, and also acted as service providers to other funds that ultimately invested in Legacy, including Montpellier Resources Ltd. (“Montpellier”) Renaissance Technologies, LLC (“Renaissance”) is a New York hedge fund management company, and Meritage Fund Ltd. (“Meritage”) is an investment fund under its umbrella that invested in BLMIS through a swap agreement with HCH Capital Ltd. (“HCH”), one of Legacy’s predecessors. (¶¶ 1, 38–39.) Meritage’s investment activities were overseen by a committee (the “Meritage Committee”), which included Paul Broder, Peter Brown, Henry Laufer, Nathaniel Simons and James Simons. (¶ 40.) Rafael was also a member of the Meritage Committee.”
• Indeed the case is a particularly interesting read as is this one “Throughout their investment relationship with Madoff, the Mayers never conducted any independent, meaningful, or reasonable due diligence on their BLMIS investments. Rather, they created new vehicles into BLMIS to further enrich themselves. The Mayers also employed the services of companies they owned and/or controlled, such as Khronos and Khronos Capital Research (the “Khronos Defendants”), to service their BLMIS investments.”.
• What is most surprising, is that at no point did Renaissance Technologies mention to the SEC that Jimmy Meyer was one of Jim Simon’s oldest friends per the MIT Technology Review “After he graduated from MIT in 1958, Jim Simons and his friends Jimmy Mayer ’58 and Joe Rosenshein ’57, PhD ’63, rode from Boston to Bogotá on motor scooters. The trip took seven weeks and required some creativity, given the travelers’ tight budget. “Mostly we camped out,” Simons recalls. But “if it was a little town and it had a jail, we asked if we could sleep there, because we knew we’d be safe.” Frequently, the jailers agreed, allowing them to stay the night in a cell. By the time the group reached Costa Rica, they had run out of money and were “subsisting on bananas,” Simons says. Although Rosenshein stopped in Barranquilla, in northern Colombia, Simons and Mayer eventually reached Bogotá, where they were welcomed by Edmundo Esquenazi ’58 and spent the summer hanging out and playing croquet.”
• Early Deaths/Suicides/Murders – connected with RenTech:
• (1) Russian RenTech employee – Alexander Astashkevich, killed himself and his wife in 2006 – arguing amongst other things over money.
• (2) William Broeksmit – a Deutsche Bank employee who managed the RenTech basket options subject to the US IRS investigation was found hanged in 2014. Broeskmits emails explaining RenTech’s use of the trade were provided to US investigators prior to his death.
• (3) James Simons has the misfortune of having 2 of 4 children die as adults in separate accidental deaths Paul Simons in 1996 run over by Car backing out of driveway, and Nicholas Simons in 2003 – drowned in Bali.
• (4) A journalist for McClatchey died of blunt for injuries shortly after publishing his initial story on Robert Mercer http://m.timesunion.com/allwcm/article/Scott-Christianson-69-acclaimed-journalist-11149980.php#photo-12912333
• Luck – Long Oil when Iraq invades Kuwait, Uniquely Avoids Bond Market rout in 1994, Avoids reputational risk of a number of Computerised trading model funds closing due to poor returns (including those run by Co-CEOs Brown & Mercer).
• Russia – Its clear the hedge fund has strong links with Russia, both in terms of people and assets, and counterparties (Deutsche bank)

What I am still thinking about as a risk factor.

• The main medallion fund charges 5% of assets under management and 40% of any profits made on that money (5 and 40), to its clients – who are the key owners – James Simons & Robert Mercer. The rate maybe 5–10 years back was 2 & 20, and it has dropped significantly in recent years. I can’t see a good reason why they would want to extract that much cash (which would attract various taxes along the line – and in essence convert what would otherwise be capital gain into income – though there are many caveats as to why that might not be the case given tax loopholes).

DETAILED CHRONOLOGY

• 25 April 1938 – James Simons born
• 26 January 1941 – Barbara Simons born in Boston Massachusetts – grew up in Cincinnati, Ohio http://ethw.org/Oral-History:Barbara_Simons
• 26 January 1943 – James Simons attends Barbara Simons second birthday party – Parents lived in same apartment building in Brookline, Massachusetts
• 11 July 1946 – Robert Mercer is born
• Pre 1959 – James Simons description of his childhood – “When did you first get interested in math? Was there a singular moment, like Einstein and his compass, that turned you on to math? I was always interested in math, even when I was a very little kid. I don’t know what compass moment Einstein had, but there was rarely a doubt in my mind that I would do anything except mathematics. There was a brief period I thought I might like to be a Rabbi, but it fortunately came and went. When I went to MIT, that’s all I wanted to study, and that’s basically all I did study, except I took some literature courses which I enjoyed, but basically I just wanted to learn math and prove theorems. I liked to prove theorems”
• Prior to Sept 1955 – James Simons is recruited to then rejected from Wesleyan: “When he told his employers he hoped to attend MIT, “they thought it was the funniest thing.” Ultimately, Simons had no choice about it: After Wesleyan recruited, then rejected him, there was only MIT. “I was destined for this place,” he says. http://techtv.mit.edu/videos/16727-mathematics-common-sense-and-good-luck-my-life-and-careers
• September 1955 – James Simons (aged 17) starts 4 year Bachelor’s degree at MIT (he finishes in 3 years).
• Before May 1958 – James Simons decides to become a Mathematician over a game of Poker: “The idea of a math career was “clinched” for Simons after a typical late night of poker and sandwiches with MIT classmates. At 1 a.m. in a Brookline restaurant, Simons saw MIT math legends Isadore Singer and Warren Ambrose “doing math over coffee and cigarettes,” which he “thought was the coolest thing.”http://techtv.mit.edu/videos/16727-mathematics-common-sense-and-good-luck-my-life-and-careers
• Before May 1958 – James Simons meets Leo Guhart “As a largely friends-and-family affair, the partnership and its 26-company portfolio – running the gamut from biotechnology and burglar alarms to information security and water purification – have been shaped by personal ties, none more important than those between Simons and Guthart, who is also 66. These date back more than 40 years, to when Guthart was studying at Harvard University (where he earned a bachelor’s degree in physics, an MBA and a doctorate in business) while Simons was wrapping up his undergraduate studies in mathematics at the Massachusetts Institute of Technology.” http://archive.is/2017.06.07-123700/http://www.institutionalinvestor.com/article/1025234/the-other-face-of-jim-simons.html%23/.WTfzYtLLfK5
• May 1958 – James Simons completes his degree at MIT in 3 years
• Summer 1958 (after May 1958) – James Simons & Colombian friends bike ride from Boston to Bogota. A Fundamental influence in his life: “In his personal life, Simons has not always stayed the course. Between degrees at MIT and Berkeley, Simons and some Colombian friends he had made at school undertook a motor scooter trip from Boston to Bogotá – his first trip out of the country. “It’s amazing that I returned intact, but I did,” he says. They rode through Mexico and Guatemala and Costa Rica on their Lambrettas, sometimes sleeping on the ground or even in the local jails of the little villages they passed through. “Everyone wanted to see the gringos who had done this crazy thing, so we were invited to all kinds of people’s houses,” he recalls. Some time after that scooter trip, the country became a catalyst for Simons’s business career when his friends there started manufacturing vinyl tile and plumbing, and he became an investor. Their company dovetailed with the construction boom in Colombia, and Simons profited from the association for many years to come.” http://archive.is/2017.06.07-122653/https://alumni.berkeley.edu/california-magazine/spring-2016-war-stories/world-s-smartest-billionaire-james-simons-cal-alumnus. “After he graduated from MIT in 1958, Jim Simons and his friends Jimmy Mayer ’58 and Joe Rosenshein ’57, PhD ’63, rode from Boston to Bogotá on motor scooters. The trip took seven weeks and required some creativity, given the travelers’ tight budget. “Mostly we camped out,” Simons recalls. But “if it was a little town and it had a jail, we asked if we could sleep there, because we knew we’d be safe.” Frequently, the jailers agreed, allowing them to stay the night in a cell. By the time the group reached Costa Rica, they had run out of money and were “subsisting on bananas,” Simons says. Although Rosenshein stopped in Barranquilla, in northern Colombia, Simons and Mayer eventually reached Bogotá, where they were welcomed by Edmundo Esquenazi ’58 and spent the summer hanging out and playing croquet.” http://archive.is/2017.06.07-122838/https://www.technologyreview.com/s/602561/the-polymath-philanthropist/
• September 1958 – Barbara Simons (age 17) starts undergraduate degree in Mathematics at Wellesey
• September 1958 – James Simons (age 20) starts graduate studies at MIT
• Between September 1958 and January 1959 – Barbara Simons moves to Boston and starts dating James Simons: “When we got there, my mother called the mother of the man I eventually married (and got divorced from). Our mothers had lived in the same apartment building together, and he had come to my second birthday party. Anyway, my mother called her, and they fixed us up, and we went out on a blind date. He was at MIT at the time. He was a first-year graduate student in mathematics; he’d done his undergraduate degree in three years – very bright person. We went out a little bit and didn’t hit it off too much, and we stopped seeing each other,”
• After January 1959 – Barbara meets up again with James Simons when James is a 1st year Graduate Student – in her second semester of freshman year year switches dorms and boards with woman from Bogota, Colombia who was dating someone else from Colombia who was a good friend of Jims. Through them, she meets Jim, and after 4 nights of going out each night they decide to get married: “and then I ran into him again; but before we stopped seeing each other, he encouraged me to take this junior/senior math class. He said, “Oh, you should be taking analysis! You’ve done calculus; take analysis.” It took me a long time to get the hang of analysis. It was a struggle, but I got a B; it wasn’t disgraceful. But meanwhile, the other young women in the class were thinking that I was just this brain, because I was this little freshman taking a junior/senior math classes. Anyway, I ran into Jim again the beginning of my second semester, when I switched dorms. I ended up in a dorm where there was this woman from Bogota, Colombia whom I’d met earlier when I went out with Jim for a little bit. She was dating someone else from Colombia who was a good friend of Jim’s, and through them I ran into Jim, and we started going out again – and after four nights of going out every night, we decided to get married.”
• After April 1959 – Barbara and James Simons elope to Reno California to get Married: “I had just turned 18. That was really dumb! He wasn’t much older; he was 21. We decided to get married, and we got engaged a few months later, and we told our parents we wanted to get married. He was going to Berkeley the following year, so we wanted to get married and have me go out to Berkeley with him. My parents thought I was too young. So we eloped! Actually, we came to California first. My parents gave me permission to come to California. Transferring wasn’t easy, because my grades weren’t so terrific, but I came to California and started going to Cal as an undergrad, my sophomore year. At one point, one of us said “Let’s get married” and the other one said “Okay!” So we scraped together enough money to buy a round-trip bus ticket to Reno. And then, I think six weeks later, I got pregnant. It was actually after I got married, but I think a lot of people felt that it was a shotgun wedding!”
• September 1959 – James Simons starts at Berkeley
• At the beginning of September 1959 – At the beginning of her sophomore year at Berkeley, Barbara and Jim eloped to Reno. A year later they had her their first child (Barbara was only 19). Source: the Princess at the Keyboard: Why Girls Should become Computer Scientists
• After September 1960 – James Simons meets Shiing-Shen Chern – a Chinese national – Chern becomes a naturalised citizen of the United States in 1961 and is elected a member of the United States National Academy of Sciences. (Background – only in 1972 after the Shanghai Communiqué was issued by the United States and the People’s Republic of China on February 27, 1972, did the relationship between China and USA start to normalise, and American citizens were allowed to visit P.R.China.)
• During 1960 – Elwyn Berlekamp becomes Co-op Student and Summer Employee Bell Telephone Laboratories -1960–63 https://math.berkeley.edu/~berlek/employment.html
• Before January 1960 – Barbara Simons gives birth to Liz Simons: “A year later they had her their first child (Barbara was only 19). – Source: The Princess at the Keyboard: Why Girls Should become Computer Scientists”
• During 1960's - development of Hidden Markov Models – “One common genomic analysis tool – the Hidden Markov Model – was invented for pattern recognition by defense institute code breakers in the 1960s, and Dr. Patterson is an expert in that technique. It can be used to predict the next letter in a sequence of English text garbled over a communications line, or to predict DNA regions that code for genes, and those that do not.”
• 1961/2 – James Simons also at MIT according to Barbara Simons: “He was at MIT ‘61-’62. Then he was thinking about this Colombia thing, but that didn’t work out, so he got a year’s position at Harvard”
• 1961 – James Simons invests in Colombian floor tile and pipe company. Note – his Colombian co-investors later form his first fund. “In 1961, he and a few MIT classmates invested in a Colombian floor tile and pipe company http://archive.is/2017.06.07-185644/https://faculty.fuqua.duke.edu/~charvey/Teaching/BA453_2005/II_On_Jim_.pdf […]”Once, after driving to Bogotá, Colombia, on a motor scooter with a college friend, he persuaded his father to join him in an investment there.”
• By May 1962 – James Simons receives his Ph.D / doctorate from Berkeley in 3 years aged 23 under supervision of Bertram Kostant. https://alumni.berkeley.edu/california-magazine/spring-2016-war-stories/world-s-smartest-billionaire-james-simons-cal-alumnus
• Before 1962 – James Simons tries trading stocks and soybeans at Berkeley – “At Berkeley he tried his hand at trading, looking to invest about $5,000 in wedding gifts from his first marriage. He found that stocks bored him. “I went to a Merrill Lynch broker,” recalls Simons. “He said, ‘Try soybeans.’”
• 1964 – James Simons works at Institute for Defence Analyses (US DoD) at Princeton NJ – “This is not your average last-laugh story. Simons not only entered the prestigious university at the age of 17, in 1955, he finished the four-year program in three years before heading for UC Berkeley where he received his Ph.D. in mathematics in 1962 at the age of 23. A few years later, he was hired and then fired as a code cracker for the Pentagon’s secretive Institute for Defense Analysis (IDA) at Princeton.”/ “Seeking adventure, he signed on in 1964 as a code breaker with the Institute for Defense Analyses, a nonprofit research organization that performed work for the U.S. Department of Defense. Angered by a New York Times Magazine story that he thought overly optimistic about the military effort in Vietnam, Simons made comments to Newsweek that were critical of the war. After telling his boss about the interview, he says he was fired from IDA.”
• October 1967 – James Simons writes letter to NY Times criticising General Taylor’s Vietnam strategy: “”Simons began working at the Pentagon’s Institute for Defense Analysis in part because they paid and allowed mathematicians and scientists to work on their own projects in their spare time. Although not overtly political, Simons was appalled when his uber-boss, General Maxwell Taylor, wrote a story for The New York Times Magazine in 1967 talking about how great things were going in Vietnam. “I thought it was a really stupid article, so I wrote The New York Times a letter saying not everyone who works for General Taylor agrees with his views, and I gave my views, which were different from those of General Taylor,”
• Spring 1968 – James Simons is fired from Institute of Defence Analyses – “He was fired a few months later, in the spring of 1968, for talking with a reporter about his antiwar views. He still marvels that Stony Brook was willing to make him a department chairman that year, when he was just 30.” / “Simons says. “Nobody [at the IDA] said anything, but I was clearly on their watch list.” Shortly thereafter, a stringer from Newsweek paid him a call, looking for defense department employees who were opposed to the war. Simons told him that he was only working on his own stuff until the war was over, as a sort of passive protest. “That was sort of my policy, but I was exaggerating a little bit,” he says now. “I was kind of a wise guy.” He then told his boss what he had done, who in turn told Taylor, who in turn fired Simons. The 29-year-old math genius was stunned. “My title,” he told his boss, “is Permanent Member of the Institute of Defense Analysis. How can you fire me?” He was told, “The difference between a permanent member and a temporary member is that a temporary member has a contract.” Though Simons says his objections to the war were more rational than emotional, the Domino Theory “just seemed absurd to me, and there were all these kids getting killed,” he recalls. “Because I had a child and I was a little bit older, I wasn’t going to get drafted. It just seemed a rotten business, so I spoke out against it.” His daughter, Liz, who along with her brother Nat later went to Berkeley, remembers being in summer camp where all the other kids got candy from home. “I was 10 and the Vietnam War was happening, and he and my mom sent me a whole bunch of peace necklaces,” she says.
• 1968 – Lalit Bahl joins IBM TJ Watson Research Centre – “Bahl joined the IBM T.J. Watson Research Center in 1968, working on several research projects in information and communication theory. In 1972, he joined the newly formed Speech Recognition Group to work on algorithms for the automatic recognition of human speech. During the next few years, along with two colleagues, he pioneered the application of Markov Models to the problems of speech recognition. From 1979–1997, Bahl served as the Manager of the Speech Algorithms Group at IBM, which produced new and innovative algorithms for speech recognition. In 1991–92, he led a team at the IBM Science Center in Paris that developed a multinational speech recognition system.”
• 1968 – James Simons becomes Chair of Math at Stony Brook University, New York. “In 1968 he was chair of the math department at Stony Brook University, where he created one of the top geometry centers in the world. While there, he and Shiing-Shen Chern, who was at Berkeley, published what is now known as the Chern-Simons Invariant, which later had a huge influence on theoretical physics”
• Summer 1970 – Nick Patterson spends Summer in US – “In 1970 I spent most of the summer in the US, getting a good result in the US [Chess] open (9/12)”
• 1971 – IBM sets up Continuous Speech Recognition research task force – “The task force was put together in 1971 to study the matter. The group included John Cocke (inventor of RISC machines), Herman Goldstine (right hand of von Neumann in research leading to ENIAC) and others. It recommended that a Continuous Speech Recognition group be established in the Research Division”
• 1971 – ARPA (later DARPA) sets up Speech Recognition project – “In 1971, parallel to the work of the IBM task force, ARPA established a project in Speech Understanding. I don’t know what led to that decision, but the main forces behind it were Allen Newell and J. C. R. Licklinder. Funds were provided to Carnegie Mellon, Systems Development Corporation, Bolt Beranek & Newman, and probably SRI, Sperry-Univac, University of Pennsylvania, UC Berkeley, and UCLA. Not all of these institutions were to field complete systems. For instance, Ohio, UCLA, and Berkeley provided consulting by linguists (Peter Ladefoged, Vicky Fromkin, John Ohala, Michael O’Malley, and June Shoup).”
• 1972 – IBM sets up [larger] Continuous Speech Recognition group. “CSR group was started in early 1972 under the management of Joe Raviv. At the time IBM had a small speech group in one of its development laboratories in Raleigh, NC”/ “The staffing of the group was then completed by volunteers from the Computer Sciences Department: Lalit Bahl, Raimo Bakis, George Nagy, and others (later Jim and Janet Baker joined as well). But at the time only Bakis, Das, Dixon, and Tappert knew anything about speech. […] I phoned Joe Raviv (whom I knew as a colleague from my sabbatical at IBM in 1968 – 69) to ask if I could spend three months in his group in Yorktown Heights. His answer was “Certainly, the sooner you arrive the better. We are starting to work on speech recognition.” By the time I arrived to take up that summer job, Raviv was promoted to manager of the IBM Scientific Center in Haifa, and IBM was negotiating with Professor Jonathan Allen of MIT to take over the speech group. These negotiations were not successful, and several weeks later the job was offered to me. I requested Cornell to grant me a leave of absence; they did, and I joined IBM (the following year I asked for and got another year, but when I tried to carry out the same maneuver in 1974, I was turned down)”
• Summer 1972 – Frederick Jelinek joins IBM Continuous Speech Recognition group and Robert Mercer joins group. “Towards the end of the summer I took over the direction of the group and received a gift from heaven: the freshly graduated physicist Robert Mercer, who in the spring accepted an IBM job in a group that was abolished before he arrived in September”
• September 1972 – Nick Patterson joins [GCHQ] UK government crypto-analytic team: “Thirty years ago, Nick Patterson worked in the secret halls of the Government Communications Headquarters, the code-breaking British agency that unscrambles intercepted messages and encrypts clandestine communications. He applied his brain to “the hardest problems the British had,” said Dr. Patterson, a mathematician. […] In September 1972 I started a new job and my first child was born. I had plenty to do, and just moved on in my life”
• 1973 – James Simons sells Colombian tile company: “In 1973 the tile company got sold, and he turned the proceeds over to a mathematician he knew who was trading commodities. “In eight months he had multiplied my money by ten times,” says Simons.” http://archive.is/2017.06.07-185644/https://faculty.fuqua.duke.edu/~charvey/Teaching/BA453_2005/II_On_Jim_.pdf
• 1974 – James Simons organised a trading pool run by another mathematician.
• Summer 1974 – Frederick Jelinek leaves IBM Continuous Speech Research Group.
• 1975 – Publication of Dragon System Paper – Baker 1975 – Hidden Markov models – “the Dragon System (Baker 1975) implemented by the Bakers, graduate students at CMU. It used Hidden Markov models (HMMs) whereas the rest of the ARPA participants based their work on templates, Dynamic Time Warping (DTW), and hand-written rules. Baker, J. K. 1975. The dragon system: an overview. IEEE Transactions on Acoustics, Speech, and Signal Processing, ASSP-23(1):24 – 29.”
• 1975 – Bahl and Jelinek Speech Recognition paper: “Bahl, L. R. and F. Jelinek. 1975. Decoding for channels with insertions, deletions, and substitutions with applications to speech recognition. IEEE Transactions on Information Theory, IT-21:404 – 411.”
• 1975 – Jelinek, Bahl, and Robert Mercer paper: “Jelinek, F., L. R. Bahl, and R. L. Mercer. 1975. Design of a linguistic statistical decoder for the recognition of continuous speech. IEEE Transactions on Information Theory, IT-21:250 – 256.”
• 1975 – Jelinek paper on continuous speech recognition – “Jelinek, F. 1976. Continuous speech recognition by statistical methods. IEEE Proceedings, 64(4):532 – 556.”
• June 1976 – Bahl and Robert Mercer paper: “Bahl, L. R. and R. L. Mercer. 1976. Part of speech assignment by a statistical algorithm. In IEEE International Symposium on Information Theory, pp. 88 – 89, Ronneby, June”
• 1976 – James Simons leaves Stony Brook starts a fund which he works on part time 1976–1978: “He left Stony Brook in 1976, he said, because he had been struggling with an unsolved problem for two years and was restless. “Some money had come in from an investment,” [NOTE – THIS IS THE SALE OF COLOMBIAN TILE COMPANY] he said. “I invested that money, and it went very well. I thought, ‘Hey, I’ll try this.’ ” […] Simons began to make the transition out of academics, working half time at Stony Brook and trading currencies with his own money between 1976 and 1978"
• 1978 – At IBM, Frederick Jelinek starts natural language recognition using an IBM internal correspondence corpus [Note IBM was working with ARPA at this point]: “ 1978 (or so), we thought it was time to abandon artificial grammars and to start recognizing “natural” speech. We settled on a 5,000-word vocabulary and set ourselves the task of recognizing read sentences from an IBM internal correspondence corpus”
• 1978 – James Simons creates Monemetrics and the Limroy Colombian fund a precursor to the Medallion Funds. Limroy Fund traded commodities and financial instruments on a discretionary basis and later branched into technical analysiis and venture capital – Strip-mall based – East Setauket Note: The firm primarily traded currencies at the start. It did not occur to Simons at first to apply mathematics to his business, but he gradually realized that it should be possible to make mathematical models of the data he was collecting./ “1978 he left Stony Brook completely, to form a private investment fund called Limroy. Initially, he took a fundamental approach, trying to predict factors like Federal Reserve Board policy and interest rate movements. Over the next ten years, Limroy grew initial capital 25 times by investing in everything from venture capital to technical currency trading” http://archive.is/2017.06.07-185644/https://faculty.fuqua.duke.edu/~charvey/Teaching/BA453_2005/II_On_Jim_.pdf / “Simons started an early fund with his Colombian friends, with whom he’d been in business, and discovered again how he disliked the vagaries of the stock market. “When you’re a fundamental trader,” he says, “one day you come into the office and everything has gone your way overnight – Oh boy, I’m a genius! And the next day you come in and everything has gone against you and it’s Oh, boy, I’m a dope. It’s kind of stomach-wrenching.” So he systematized his investments and turned to the world he had come from for his talent.”
• 1979 – Lalit Bahl serves as Manager of the Speech Algorithms Group at IBM – “From 1979–1997, Bahl served as the Manager of the Speech Algorithms Group at IBM, which produced new and innovative algorithms for speech recognition.”
• 1979 – James Simons and Peter Yianilos found Proximity Technology – [Note – links to Franklin Electronics 1984 onwards]: “Through another company, Simons had helped to develop new technology that would give Franklin a second life. In 1979 Simons and scientist Peter Yianilos, an expert in artificial intelligence and speech recognition, had founded Proximity Technology, a pioneer in hand-held electronic book technology and spell-check software. The technology was futuristic. “The first book cost $800 to produce” [QUESTION – WHO BOUGHT THESE BOOKS AND WHY – WERE THEY AN EARLY TRADEABLE CURRENCY?]
• 1980 – Nick Patterson moves from UK to US – “In 1980, Dr. Patterson moved with his wife and children to Princeton, N.J., to join the Center for Communications Research, the cryptography branch of the Institute for Defense Analyses, a nonprofit research center financed by the Department of Defense. His work earned him a name in the cryptography circle. “You can probably pick out two or three people who’ve really stood out, and he’s one of them,” said Alan Richter, a longtime scientist at the defense institute […]” / “In 1980 I moved with my family to the United States. I had a new career to establish, and haven’t played tournament chess since. I still follow the game, and try and keep up with theory. I don’t in fact think I have lost all that much in strength, though without tournament testing that is very likely an illusion”
• 1980 – Italy - IBM researchers give academic course (CISM auspices) natural language recognition : “In 1980 we gave a course in Udine, Italy, organized by CISM (International Centre for Mechanical Sciences)”
• 1981 – James Simons invests in Franklin Computer Corp: “But technology nowadays plays a prominent part in his U.S. portfolio. Simons got involved in the early personal computer, technology-gadgets and electronic-book markets through a 1981 investment in Franklin Computer Corp., which was founded that year as one of the original general purpose personal computer companies. But in 1984 the company filed for bankruptcy after being forced to settle a copyright infringement lawsuit brought by Apple Computer. It emerged from bankruptcy the following year under new management.”
• 1982 – James Simons sets up [RenTec fund/changes name]. Note: RenTec was initially formed as an S-Corporation owned directly by a number of Employee Stockholders and their related trusts.
• 1982 – Henry Laufer advises commodity trading portion of fund [Question – had Henry Laufer run the earlier trading pool?]
• 1982–3 or 1985 Morgan Stanley starts quantitative pairs tradings – relevant to Robert Frey – “The genesis of Stat Arb can be traced from a quantitative trading strategy called “pairs trading”. And 25 years after its birth, this strategy, which exploits price discrepancies and correlation between a pair of stocks to buy and sell them and make money, still lies at the heart of Statistical Arbitrage. It is believed that the notion of pairs trading had been around for many years prior to 1980; apparently, Paul Wilmott has claimed that this trading idea was discovered at his shop in 1980. However, the formalization of the concept of pairs trading and its implementation as an acceptable quantitative trading strategy happened in Morgan Stanley in 1982–83. There is a bit of a debate over who exactly discovered pairs trading. Some, including Bookstaber, believe that it was Gerry Bamberger, who hit upon this idea while working at Morgan Stanley & Co. in the early eighties. Bamberger, a computer science graduate from Columbia University, left Morgan Stanley in 1985 and disappeared from Wall Street around 1987. Others believe that it was NunzioTartaglia, a brilliant quan trader, working with a small group of researchers at Morgan Stanley in 1985 that discovered pairs trading. Putting the debate to rest, let’s just say that it was Gerry Bamberger and NunzioTartaglia at Mogran Stanley who discovered pairs trading in early to mid-1980s. In the early 1980s Morgan Stanley was assembling a team of computer scientists and traders to work in an independent, ultra secretive group, which would exploit the discrepancies in the stock prices to generate abnormal profits. It would be a well-planned assault on the Efficient Market Hypothesis. One of the members of that team was a computer scientist from Stanford named David Shaw, who would later founded the legendary Wall Street investment firm D.E.Shaw& Co. Bamberger, Tartaglia and Shaw, all worked as a part of this ultra-secretive group that was in search of the Holy Grail of trading. Morgan Stanley’s black box was born in 1985 that would earn the firm a lot of money, and of course, bolster its reputation man on Wall Street. Even though the term Statistical Arbitrage would only come into prominence in the mid-1990s when Wall Street traders would embrace a plethora of complex and esoteric mathematical model to exploit market anomalies, with the introduction of Morgan Stanley’s pairs trading black box the war against the theory of Efficient Markets had begun. However, with the departure of David Shaw, Gerry Bamberger and many of other associates of Tartaglia, in the mid to late eighties this quant trading group at Morgan Stanley would fall apart in spirit, though traders would continue to use pairs trading on the firm’s trading floor. In 1993, the task of resuscitating the group would fall on the 29 year old Peter Muller, who would be hired by Derek Bandeen, a prop trader at Morgan Stanley. The group would be anointed with a new name, the Process Driven Trading (PDT), and Muller would recruit his own army of quants and computer programmers to work with him. Over the next decade, Muller’s PDT would make lots of money for the firm and establish Morgan Stanley as the leader in the field of Statistical Arbitrage.”
• 1983 – MIT holds two week course on natural language recognition
• 1984 – IBM project success on real time performance continuous speech recognition: “Our ambition was to use a combination of IBM array processors to achieve essentially real-time performance. We fulfilled a promise to the management to achieve it by 1984" – see “we settled on a 5,000-word vocabulary and set ourselves the task of recognizing read sentences from an IBM internal correspondence corpus.” above.
• 1984- James Simons investment in Franklin Computer Corp fails: “But technology nowadays plays a prominent part in his U.S. portfolio. Simons got involved in the early personal computer, technology-gadgets and electronic-book markets through a 1981 investment in Franklin Computer Corp., which was founded that year as one of the original general purpose personal computer companies. But in 1984 the company filed for bankruptcy after being forced to settle a copyright infringement lawsuit brought by Apple Computer. It emerged from bankruptcy the following year under new management”
• 1985 – DARPA initiates computational linguistics project – “Speech recognition “which within a few years became dominated by HMM approach”
• Mid 1980's – Frederik Jalinek states he is having regular lunches and after lunch walks with Robert Mercer: “some of us started to wonder in the mid 1980s whether our ASR methods could be success- fully applied to new fields. Bob Mercer and I spent many of our after-lunch “periphery” walks discussing possible candidates. We soon came up with two: machine transla- tion and stock market modeling. It is probably only coincidence that Bob eventually ended up investigating the possibilities of stock value prediction”
• Mid 1980's - Robert Frey joins Morgan Stanley pairs trading team: “In the mid-1980s] Morgan Stanley had started doing pairs trading, one of the first [quant] trading strategies, and they were looking for someone to help with the math… They kept offering more money until I said yes.”
• Pre 1985 – Axcom Limited spun out of Monemetrics
• 1985 – Axcom becomes Trading advisor to [subfund of Monemetrics]
• 1985 – Ax Moves trading advisory company to Huntingdon Beach, California
• 1985 – Franklin Computer Corp emerges from Bankruptcy (James Simons is an investor)
• 1986 – Della Pietra brothers got doctorate at Harvard: “Della Pietra brothers – who reunited with their former IBM bosses to work on equities – were the first of many with that background. The identical twins, now 56, have never strayed far from each other: They took an honors science program at Columbia University as high school students; attended Princeton as undergraduates, studying physics; and received doctorates from Harvard in 1986.”
• 1986 – IBM Scientific Centre – Austria course on natural language recognition – “a course in Oberlech, Austria, organized by IBM Scientific Centers”
• 25 September 1986 – Numar files Patent [QUESTION when did James Simons first invest?]
• 31 December 1986 – Lord Jim Trust Created – James Simons Family Trust – Held by Bermuda Trust Company Limited [QUERY ANY COLOMBIAN MONEY TRUST SET UP AT SAME TIME? – Note 1988 Limroy fund wound up – see 1978… “for next 10 years…”]
• 1987 – Slava Katz designed a back-off model (Katz 1987) relying on Good-Turing probability estimation: “Katz, S. 1987. Estimation of probabilities from sparse data for the language model component of a speech recognizer. IEEE Transactions on Acoustics, Speech, and Signal Processing, ASSP-35(3):400 – 401.”
• 1987 – University of Lancaster builds Treebank for Frederik Jalinek “ Professors Geoff Leach and Geoff Sampson (Garside, Leech, and Sampson 1987). Because we wanted more of this annotation, we commissioned Lancaster in 1987 to create a treebank for us.”/ “Garside, R., G. Leech, and G. Sampson. 1987. Computational Analysis of English: A Corpus-Based Approach. Longman, London”
• 1987 /Before 1 March 1988 – Coling research submission by Frederik Jalinek, Lalit Bahl, Peter Brown, Bob Mercer attend a small institute opposite New York Grand Central Station to learn French – Note “Semi-Fraudulent aspects of the operation” : “ The answer was French. Because we wanted the process to be data-centric, we searched for a pair of corpora F and E that would be translations of each other. Luck was with us: The Canadian parliament Hansards (proceedings) were maintained in English and French.5 So statistical language translation was born (Brown et al. 1990), and the descendants of our original methods are being continually improved. When we started, none of us spoke French, so we decided to learn it. We uncovered a small institute whose location was opposite New York Grand Central Station on 42nd Street. The institute advertised that it would teach French to anybody in two (!) weeks of intensive immersion. We didn’t believe it, of course, but because the costs and location were convenient, we started on our daily commute. I will not go into the semi- fraudulent aspects of the operation, but Lalit Bahl, Peter Brown, Bob Mercer, and I had a lot of fun and did advance considerably our knowledge of French”
• 1987 – [links to “Semi-Fraudulent comment above] Robert Mercer does PHD in Canada – Knowledge Representation, Logics for Reasoning, Natural Language Understanding – “Ph.D. The University of British Columbia, 1987. Professor, UWO, Knowledge Representation, Logics for Reasoning, Natural Language Understanding. In cognitive science and machine intelligence, it is sometimes useful to bring the techniques of one discipline to bear on another. In the study of natural language systems, for example, computer models and data structures have supported knowledge representation in terms of syntax, semantics and prag- matics. The cross-fertilising effect of paradigms is a favourite theme of Mercer’s. A special project in this area treats the thorny problem of generating the assumptions behind a speech act as a problem in knowledge representation. Default logic, originally developed to formalise various aspects of common sense reasoning, plays a role here. It might even lead to question-answering systems that work. The University of Western Ontario, Computer Science Department, Cognitive Engineering Laboratory, London, Ontario, Canada N6A 5B7, (519) 661 2111 x86893 voice (519) 661 3515 fax, Email: mercer@csd.uwo.ca
• 1987 – DARPA starts US National Corpus under Charles Wayne: “in 1987 I arranged to visit Jack Schwartz, who was the boss of Charles Wayne at DARPA, and I explained to him what was needed and why. He immediately entrusted Charles with the creation of the appropriate organization”
• 1987 – Frederik Jalinek group starts to work on Machine Translation: “we did start working on machine translation (MT) in 1987…This formula assumes translation from the foreign language4 F into English E – Footnote F originally stood for French” – Note reports that Robert Mercer disappears at some point for several months to model French language – likely PHD.
• During 1988 – Robert Frey starts Kepler Financial Management – James Simons is a partner. “I left in 1988 to start my own company, Kepler Financial Management. One of my investors was Jim Simons, who was running Renaissance, which then had about $100 million under management…I [joined] Renaissance and exchanged my KFM stock for Renaissance stock – smartest thing I ever did.”
• During 1988 – at point in time James Simons invests in Kepler Financial Management – AUM of RenTech is USD100m
• 5 January 1988 – Numar publishes patent on MRI scanning of oil wells – Relevant to James Simons – Inventors – Zvi Taicher, Shmuel Shtrikman, Zvi Paltiel, Mordechai Shporer
• 1988 – James Simons winds up Limroy (Colombian co-Investor fund) – “1978 he left Stony Brook completely, to form a private investment fund called Limroy. Initially, he took a fundamental approach, trying to predict factors like Federal Reserve Board policy and interest rate movements. Over the next ten years, Limroy grew initial capital 25 times by investing in everything from venture capital to technical currency trading” / “In 1988 Simons decided to launch a fund that concentrated on pure trading. He shut Limroy andlaunched Medallion in March 1988. Concentrating on futures trading, the fund earned 8.8 percentin 1988 but lost money steadily in 1989 until Simons halted trading in June.” http://archive.is/2017.06.07-185644/https://faculty.fuqua.duke.edu/~charvey/Teaching/BA453_2005/II_On_Jim_.pdf
• 1988 – Franklin buys Proximity from James Simons and Peter Yianllos “Franklin bought Proximity in 1988, a year after Proximity had helped it develop the first blockbuster hand-held computer, a $69.95 spell-checker called Spelling Ace. Franklin’s shares jumped from from 21/8 to more than 10" [Question – Was Proximity held by Limroy fund?]
• Late 80's – James Simons invests in Numar Corp. “in the late 1980s, when Simons invested in Numar Corp., a traditional oil services company, which had become a leader in applying magnetic resonance imaging technology to oil and gas exploration. Numar went public at 121/2 per share in April 1994 and was sold in 1997 to energy services and construction company Halliburton Co. Halliburton bought Numar for $430 million, making Simons’ 900,000 shares of stock worth about $45 million, four times what they were worth at the time of the IPO”
• 8 April 1988 – Diggle Investments Incorporated – Nigel Oakes PR company – Note Swiss Investor Link
• March 1988 – Fund renamed Medallion in favour of Medals won: “In 1988 Simons decided to launch a fund that concentrated on pure trading. He shut Limroy and launched Medallion in March 1988. Concentrating on futures trading, the fund earned 8.8 percent in 1988 but lost money steadily in 1989 until Simons halted trading in June”
• 1988 – James Simons starts to develop Futures trading model
• Q3/Q4 1988 Medallion fund losses start mounting – From Financial World Article. 1996 “at the time Medallion was focussed on Momentum investing, Trading based on the assumption that price movements in a particular direction are likely to continue in the same direction – it took a relatively long term approach holding positions for around two weeks”
• During 1989 – Behavioural Dynamics set up – Note Diggle Investments Incorporated – “Behavioural Dynamics, set up in 1989 by a Swiss consortium of businessmen, claims to deliver ‘competitive advantage to clients through the understanding, modification and control of human behaviour’. To this end, it employs a network of psychology professors from universities around the country, notably University College, London and Warwick University”
• April 1989 30% peak to trough loss on Medallion fund. Mathematical model predicted but Simons closes down brings in 3rd party to unwind manage position. “He worked with Sandor Straus, Jim Simons and another consultant, Henry Laufer, to overhaul Medallion’s trading system during a six-month stretch. […] Henry Laufer worked to build a new short term trading system based in part on compenents of the old trading strategy […] for six months Simons and former Princeton mathematician Henry Laufer, who is still Renaissance’s research chief, rebuilt Medallion’s trading strategy, shifting from fundamental analysis to the quantitative approach that powers the firm today. “We started to think about a whole new way to look at futures,” says Simons”
• June 1989 – Simons terminates trading on Medallion
• June 1989 Simons/Ax ‘lawyer-up’ over termination of trading mandate
• June 1989 – Ax assets = 2/3 of Medallion fund
• June 1989 – Berlekamp Egypt Trip
• June 1989 – Berlekamp buys out Ax 2/3 stake, becomes CEO of Axcom. Berlekamp works with Sandor Straus, Jim Simons and another consultant, Henry Laufer, to overhaul Medallion’s trading system during a six-month stretch.
• November 1989 – Medallion fund starts trading again – Changes to high frequency trading model. “Back in action, Medallion made its mark through rapid, short-term trading across futures markets. In the early years the types of inefficiencies that could be exploited by quantitative trading abounded. The firm made money by simply arbitraging Treasury bills against Treasury futures contracts. Luck helped too. In 1990, for example, the fund was long oil when Iraq invaded Kuwait.”
• 1989 – Background – Index Participation Shares invented: “According to Gary Gastineau, author of “The Exchange-Traded Funds Manual,” the first real attempt at something like an ETF was the launch of Index Participation Shares for the S&P 500 in 1989. Unfortunately, while there was quite a bit of investor interest, a federal court in Chicago ruled that the fund worked like futures contracts, even though they were marginalized and collateralized like a stock; consequently, if there were to be traded they had to be traded on a futures exchange, and the advent of true ETFs had to wait a bit.”
• 1990 – Medallion return = 55.9% net of fees (ie after management company fees)
• 1990 – Peter Brown, Della Pietra, Della Pietra, Jelinek, Lafferty, Robert Mercer, P Roosin Paper on statistical approach to machine translation – “Brown, P. F., J. Cocke, S. A. DellaPietra, V. DellaPietra, F. Jelinek, J. D. Lafferty, R. L. Mercer, and P. Roosin. 1990. A statistical approach to machine translation. Computational Linguistics, 16(2):79 – 85"
• 1990 – Background: Toronto 35 Index Participation Units TIPs 35 issued – “launched by the Toronto Stock Exchange in 1990 and called Toronto 35 Index Participation Units (TIPs 35). These were a warehouse, reciept-based instrument that tracked the TSE-35 Index.launched by the Toronto Stock Exchange in 1990 and called Toronto 35 Index Participation Units (TIPs 35). These were a warehouse, reciept-based instrument that tracked the TSE-35 Index.”
• By 2 August 1990 – “Medallion is long Oil when Iraq invades Kuwait”
• During 1990 – Proximity is renamed Franklin Electronic Publishers: “In 1990 the company was renamed Franklin Electronic Publishers. But despite such product innovations as electronic bibles and wine guides in the 1990s, the company’s shares languished, with the exception of a brief run-up to 44 in 1995 when the company came out with one of the first electronic books. In October [2000] the stock was trading at 101/4, up from a 52-week low of 33/4"
• [Oct] 1990 – Berlekamp leaves to rejoin academia – sells interests in Axcom to Simons for 6x value purchased.
• [Oct] 1990 – Sandor Strauss takes charge of Medallion trading models
• 1990s – Bear Stearns acting a prime broker – During the 1990s, RenTec used a joint back office (JBO) arrangement with Bear Stearns to increase its leverage beyond Regulation T margin restrictions permitting a maximum leverage level of 2:1.
• 31 January 1991 – Numar assigns MRI patent to Bank Leumi LE Israel – “Feb 13, 1991 – AS Assignment Owner name: BANK LEUMI LE – ISRAEL, B.M. Free format text: SECURITY INTEREST;ASSIGNOR:NUMAR CORPORATION, A CORP. OF PA;REEL/FRAME:005597/0611 Effective date: 19910131"
• 8 February 1991 – Behavioural Dynamics Holdings Limited Incorporated (UK) Companies House (Nigel Oakes)
• 1991 – Henry Laufer joins RenTec
• 1991 – Lalit Bahl leads team in IBM Science Centre in Paris developing multinational speech recognitions system: “In 1991–92, he led a team at the IBM Science Center in Paris that developed a multinational speech recognition system.”
• EOY 1991 – Medallion fund returns 39.4%
• 1992 – DARPA establishes Linguistics Data Consortium – “Linguistic Data Consortium is an open consortium of universities, companies and government research laboratories. It creates, collects and distributes speech and text databases, lexicons, and other resources for linguistics research and development purposes. The University of Pennsylvania is the LDC’s host institution. The LDC was founded in 1992 with a grant from the Advanced Research Projects Agency (DARPA), and is partly supported by grant IRI-9528587 from the Information and Intelligent Systems division of the National Science Foundation. The director of LDC is Mark Liberman and the Executive Director is Christopher Cieri”
• 1992 – Doug Paul Lincoln Laboratories Viterbi multi-stack search algorithm: “Viterbi search for the maximizing word string W. is not optimal, Lalit Bahl developed a multi-stack search algorithm inspired by the stack algorithm of Information Theory (Jelinek 1969). The procedure was later formalized and cleaned up by Doug Paul of Lincoln Laboratories (Paul 1992) Brill, E. 1992. A simple rule-based part of speech tagger. In Proceedings of the Third Conference on Applied Natural Language Processing, pages 152 – 155, Trento, Italy. ACL”
• 1992 – Rob Frey joins RenTech from Morgan Stanley & Co: “Robert Frey, its CEO, an eight-year [NOTE – AS OF NOV 2000] Renaissance veteran who previously worked in the secretive Morgan Stanley & Co. analytical proprietary trading group.”
• 1992 – Medallion starts to trade MBS – “Medallion began trading mortgage derivatives in its fixed-income portfolio in 1992. Though not a Renaissance employee, ex­-Lehman Brothers mortgage trader Judah Frankel managed the portfolio for Medallion. In 1995, following the 1994 bond market rout, Renaissance decided to make a larger commitment to the mortgage market and became a co­general partner in a new hedge fund called Matrix, run by Frankel. After gaining 27.4 percent in 1995, the fund racked up a stellar 101.3 percent return in 1996, according to hedgefundnews.com. Then interest rates moved out of the range projected for many of Matrix’s trades, and the yield curve inverted. In 1997 the fund gained just 3.3 percent; then in 1998 it lost 20.6 percent of assets. Though several Renaissance executives still have money in Matrix withdrew as a general partner last year. “Inversion was the kiss of death,” says Simons. “The fund was unhedged with respect to the yield curve.”
• EOY 1992 – Medallion fund returns 34%
• January 1993 – Background: SPDR ETF issued for the first time
• 1993 – Nick Patterson joins RenTech: “That same year, Nick Patterson , a former code breaker for British and U.S. intelligence agencies, joined Renaissance and approached acquaintances Brown and Mercer. “IBM was in serious trouble, and morale was poor, so it was something of a recruiting opportunity,” says Patterson, who worked at Renaissance until 2001 and is now a senior computational biologist researching genetics at the Broad Institute of MIT and Harvard. The two decided to join, drawn by the 50 percent pay raise. They roomed in an attic apartment in Setauket and often dined together. When the bill came, they would pull out a special calculator that could generate random numbers. Whoever produced the higher number picked up the tab.” / “His work at the Whitehead, and now at the Broad Institute, is his most recent foray into the world of large data sets. Prior to his career in genetics research, Patterson enjoyed two successful careers based in applied mathematics. For 20 years, he worked as a cryptographer for the British, then the U.S. code-breaking agencies to decipher and encrypt highly confidential communications. He spent the next ten years with Renaissance Technologies, an investment hedge fund, building mathematical models for market prediction. Patterson was first an undergraduate and then a graduate student in mathematics at Cambridge University where he received both his B.A and Ph.D”
• 19 February 1993 – James Simons is assigned the rights to Numar’s MRI imaging patent, along with MANDELL, SEYMOUR G. & DAVIS, BARRY M., OKLAHOMA: “Free format text: ASSIGNMENT OF ASSIGNORS INTEREST;ASSIGNOR:NUMAR CORPORATION;REEL/FRAME:006624/0325 Effective date: 19930219 Owner name: SIMONS, JAMES H., NEW YORK Free format text: ASSIGNMENT OF ASSIGNORS INTEREST;ASSIGNOR:NUMAR CORPORATION;REEL/FRAME:006624/0325 Effective date: 19930219"
• September 1993 – Renaissance Technology LLC becomes GP of Nova Fund LP
• September 1993 – Mendel Mark Silber becomes Chief Compliance Officer of Nova Fund LP. He holds less than a 5% interest
• 1993 Nick Patterson looks to recruit Peter Brown and Robert Mercer- Peter Brown and Robert Mercer join from IBM Research (their focus on machine linguistics): “ In 1993, Patterson, at that time a Renaissance executive, recruited Mercer from I.B.M” / “ Nick Patterson, a British cryptographer, who worked at Renaissance Technologies in the 80s and is now a computational geneticist at MIT, described to me how he was the one who talent-spotted Mercer. “There was an elite group working at IBM in the 1980s doing speech research, speech recognition, and when I joined Renaissance I judged that the mathematics we were trying to apply to financial markets were very similar” “During Bill Clinton’s Presidency, Patterson recalled, Mercer insisted at a staff luncheon that Clinton had participated in a secret drug-running scheme with the C.I.A. The plot supposedly operated out of an airport in Mena, Arkansas. “Bob told me he believed that the Clintons were involved in murders connected to it,” Patterson said. Two other sources told me that, in recent years, they had heard Mercer claim that the Clintons have had opponents murdered.”
• 1993 Medallion fund closed to new investors. Fund sized at USD280m [CONFLICT IN AMOUNTS IN SOURCES] : “By 1993, after three dazzling years, Medallion had reached $270 million in assets and stopped taking new money”
• EOY 1993 Medallion fund returns 39.1%
• 1994 – Bond Market Rout – http://fortune.com/2013/02/03/the-great-bond-massacre-fortune-1994/ “In January 1994, the 34th month of economic expansion, bond yields were historically low and inflation seemed negligible: Wages were going nowhere, and companies dared not raise prices. But within seven short months of that promising start, something fairly unusual happened: 1994 became the year of the worst bond market loss in history.” / “The bond business isn’t just bigger. It has also become mystifyingly complex as Wall Street’s financial wizards use high-powered technology, even an occasional Cray supercomputer, to devise new ways to hedge risks or speculate on minute changes in interest rates. The growth of financial derivatives, which basically are side bets on the future course of interest rates, exchange rates, and commodities prices, has not only magnified the financial consequences of a market move but also thwarted traditional analysis of interest rate movements, which tends to focus more on economics than on internal market dynamics.”/ “Combine these recent developments with the new technological capability to hurl billions of investment dollars across oceans electronically, and you suddenly have a global bazaar where events in Chiapas, Mexico, can lead to huge gains or losses in New York, London, and Frankfurt. Not only do these markets react to one another, but they react faster than ever before. Says one veteran trader: “A move in the long bond that used to take six weeks now happens in six days.” But none of these changes can fully explain the surprising losses of recent months, a setback that has confounded virtually every major bond investor on Wall Street. To understand what happened, one has to take all these factors – a bigger, global market; derivatives; greater speed – and magnify them tenfold. That would begin to take account of the dramatic leverage that has been injected into the financial markets by traders, the professional speculators who run hedge funds, and others in recent years. Even that multiplier might not capture the full effect of forces at work on this market. Indeed, as recently as last fall, some hedge funds – and a few wealthy individuals – were buying bonds on margin for as little as 1 or 2 cents on the dollar (banks and securities dealers put up the rest). When the market cooperates, such leverage can greatly magnify the gains, as it did last year, when some hedge funds enjoyed total returns of 50% or more. When it doesn’t, losses can be staggering. Leverage not only has magnified the swing in bonds but also has given the fixed-income market some new personality twists. In recent years bonds have become less of a pure barometer of inflation expectations and more of a slave to the tactics of speculators looking to capitalize on short-term opportunities. Indeed, it was leveraged speculation that produced much of the great bond rally last year, a rally that brought long-term Treasury rates as low as 5.8% last October, and it played an equally important role in the market melee this year. That ugly chapter began in February, when the Federal Reserve began boosting short-term rates in response to signs of a strengthening economy, as well as rising prices in the commodity markets. In a normal, unleveraged environment, the rise might have calmed inflation worries and even brought long-term rates down a bit. But instead the initial increase of 25 basis points, from 3% to 3.25%, in the overnight federal funds rate triggered an immediate 40-basis- point increase in the 30-year Treasury rate as leveraged bondholders were forced to quickly liquidate their positions to curtail mounting losses on their bond portfolios. By early May of this year, when the Fed had raised the federal funds rate 75 basis points, bond prices had plummeted and bond rates had jumped 140 basis points, or nearly 1.5 percentage points.” / “One of the most remarkable aspects of the bond crash of 1994 is that there apparently were no professional money managers who cleaned up by shorting bonds or bond futures at the top of the market. Those who were making big leveraged bets on bonds seemingly all took the same, losing, side. Fortune did identify a handful of winners, but only one of those scored its gains by correctly calling the direction of interest rates (see box).”
• 1994 – Medallion fund returns = 71%
• April 1994 – Numar Corp goes public – “Numar went public at 121/2 per share in April 1994" [NOTE – did SIMONS need cash to support margin calls?]
• Year End 1994 – “RenTech has 36 Staff members And Medallion trading 40 types Of securities (up from 12 types on commencement).”
• Mid 1990's – James Simon’s hires from IBM Thomas J Watson Research Centre in Torktown Heights NY: “Simons by the mid-’90s was looking for more researchers. A resume with Wall Street experience or even a finance background was a firm pass. “We hire people who have done good science,” Simons once said. The next surge of talent – much of which remains the core of the company today – came from a team of mathematicians at the IBM Thomas J. Watson Research Center in Yorktown Heights, N.Y., who were wrestling with speech recognition and machine translation.” / “Speech recognition and translation are the intersection of math and computer science,” says Ernie Chan, who worked at the research center in the mid-1990s and now runs quant firm QTS Capital Management. The scientists weren’t just working on academic problems; they were also developing theories and writing software to implement the solutions, he says. The group’s work eventually paved the way for Google Translate and Apple’s Siri” / “Eventually at least 10 former members of the IBM CSR group were to be employed by that same company. The performance of the Renaissance fund is legendary, but I have no idea whether any methods we pioneered at IBM have ever been used. My former colleagues will not tell me: Theirs is a very hush-hush operation!”
• 1995 – “Medallion makes most of its 1995 trading profits in the roiling Japanese yen, Nikkei average and government bond markets – but the actual direction of the market didn’t matter”
• 1995 – RenTech becomes a co-general partners in a new hedge fund called Matrix run by Judah Frankel: “In 1995, following the 1994 bond market rout, Renaissance decided to make a larger commitment to the mortgage market and became a co­general partner in a new hedge fund called Matrix, run by Frankel. After gaining 27.4 percent in 1995" Note – the fund was unhedged with respect to the yield curve.
• [ ] James Simons buys Kepler Financial Management
• 1995 – Alexander Astashkevich obtains Ph.D. Massachusetts Institute of Technology 1995 Dissertation: Fedosov’s Quantization of Semisimple Coadjoint Orbits
• 1995 – David Magerman joins Renaissance Technologies LLC
• Year End 1995 – Judah Frankel’s Matrix returns 27.4%
• 1996 – Ronnie Rosenfeld of a Trigger Language Model that allowed the discourse topic to influence word prediction (Rosenfeld 1996): “Rosenfeld, R. 1996. A maximum entropy approach to adaptive statistical language modeling. Computer Speech and Language, 10(3):187 – 228.
• January 1996 – Peter Fitzhugh Brown becomes principal equity trader (Portfolio manager) for Nova Fund LP. Holds less than 5% interest
• January 1996 – Robert Mercer becomes principal equity trader (Portfolio manager) for Nova Fund LP. Holds less than 5% interest.
• January 1996 – More IBM veterans join RenTech – “More IBM veterans joined them on Long Island, including Stephen and Vincent Della Pietra , the string-theorist twins; Lalit Bahl , who had created algorithms to recognize human speech; Mukund Padmanabhan, whose specialty was digital-signal processing; David Magerman , a programmer; and Glen Whitney , who wrote software as a summer intern. “The takeaway from IBM was that the whole is greater than the sum of its parts,” says Chan. “They all worked together”
• 1996 – Royal Bank of Canada (RBC) – initial options structure for medallion’s trading fund. The first basket option structure appears to have been designed between 1996–1997, by RBC. That year, according to George Weiss employees, RBC marketed a basket option structure using a derivative option on a managed trading account to circumvent the leverage restrictions in Regulation T.185 The option enabled a hedge fund, who was the option holder, to act as the investment advisor to the account set up by the bank. The bank also provided financing to add funds to the trading account,
• Mid 1996 – Alexey V. Kononenko finishes Uni Pennsylvania Undergrad
• Summer 1996 – James Simons spends 6 weeks with Family on Yacht in Italy
• 1996 – BACKGROUND – GOOGLE research strategy paper
• 1996 – Serge Ferleger Paper: “Ferleger, Serge; Sukochev, Fyodor (1996), “On the contractibility to a point of the linear groups of reflexive noncommutative Lp-spaces”, Mathematical Proceedings of the Cambridge Philosophical Society 119: 545 – 560"
• September 1996 – James Simon’s son Paul was killed bicycling on Long Island – “Paul Simons was passionate about cycling. He was killed on his bike by a car as it backed out of a driveway in front of him. His father created a bike park out in the Stony Brook area in his memory.”
• At October 1996 – Trading characteristics of Medallion Fund are described: “Medallion trades some 40 instruments, moving between short and long positions – usually within a couple of days. Because it’s so short-term oriented, volatility is crucial. […] Roughly 75% of the fund’s exposure is in interest rat instruments such as German and French bonds, currencies and stock indexes, with the balance in commodities like wheat the crude oil. In part the allocation is based on the liquidity of the markets. […] Renaissance also pays close attention o cash management, since on average just 25% of Medallion’s capital is used for trading due to the inherent leverage of the futures markets, where margin requirements often amount to only a few percentage points. Medallion puts Treasuries in its margin accoutns, which earn interest. Overall 75% of the fund’s cash is in Treasury bills and bonds, with an average duration of about three years. Ten Percent is in mortgage pass-through instruments and the remaining 15% is in unleveraged mortgage -backed derivatives. Roughly a third of last year’s [1995] 38% return came from this portfolio.”
• At October 1996 – Trading characteristics of Nova LP described: “ Interestingly…another of Simon’s offshore funds, Nova, has been struggling since its 1993 inception. For this computer-driven stock-trading fund, Simons deploys a market-neutral strategy with equal short and long positions, adjusted for volatility. So for example, if he is short a highly volatile stock by $2, he will go long a steadier stock by $3. The idea is to take advantage of short-term price fluctuations without betting on the market as a whole. Unfortunately it started poorly losing 5% in 1994. The problem? Transaction costs are far higher for stocks than for commodities, making it harder to find short-term positions worth taking. But tinkering with models and trading costs has helped of late. Last year [1995], Nova, was up 12% (net) and is up another 18% this year through August.”
• At October 1996 – Trading Characteristics of Matrix described: “Renaissance has had better luck with Matrix, a mortgage-backed derivative fund it started last year [1995]. Managed by Judah Frankel of Fibonnacci Partners, who also runs the mortgage money in Medallion. Matrix gained 27% in 1995, and was up a mind boggling 90% through August, benefitting from cheap prices and a steepening of the yield curve.”
• At October 1996 – Trading Characteristics of Equimetrics briefly described: “Finally a new math-driven stock investing system for institutions, called Equimetrics is also in the works.”
• By October 1996 – Henry Laufer is Vice President of research at RenTech
• 12 October 1996 – James Simons interview with Financial World is published. As of date of interview, [Medallion] funds returned 44% since 1989.
• Year End 1996 – Matrix MBS returns 101.3% via Mortgage-backed strategy – “the fund racked up a stellar 101.3 percent return in 1996, according to hedgefundnews.com.”
• During 1997 – Renaissance Technologies leaves Stony Brook Business Incubator premises to move into its own premises in East Setaukey. https://faculty.fuqua.duke.edu/~charvey/Teaching/BA453_2005/II_On_Jim_.pdf
• Jun 1997 Medallion Fund LP becomes Limited partner in Nova Fund LP
• 1997 – James Simons folds failing funds into Medallion: Kepler Financial Management renamed Factor Nova Funds – becomes a sub-fund of Medallion. Medallion becomes a multi-strategy fund. “In 1997 he folded a middling market-neutral fund into Medallion after just three years.”
• 14 June 1997 – Numar Corp solds to Halliburton Co for USD430m – James Simons stock worth USD45m (4x IPO price): “June 14, 1997 The Halliburton Company has signed an agreement to acquire the Numar Corporation in a transaction worth $ 360 million. The proposed merger has received unanimous approval from the boards of both companies, although it is still subject to approval of Numar’s stockholders. Numar designs, manufactures and markets a patented proprietary well-logging device, magnetic resonance imaging logging, to evaluate sub-surface rock formations in newly drilled oil and gas wells. Over the last two years, Halliburton, one of the world’s largest diversified energy, engineering, maintenance, and construction companies, has been a licensee of Numar. Numar will operate as a wholly owned subsidiary of Halliburton and part of Halliburton’s energy services business segment.” / “ DALLAS, June 10 /PRNewswire/ – Halliburton Company (NYSE: HAL) and NUMAR Corporation (Nasdaq: NUMR) today jointly announced that they have signed a definitive agreement providing for the acquisition of NUMAR by Halliburton in a stock-for-stock transaction valued at about $360 million, or approximately $39.62 per NUMAR share, based on Halliburton’s closing share price on June 9, 1997. Under terms of the agreement, Halliburton will issue 0.4832 of a share of its common stock for each outstanding share of NUMAR common stock (or 0.9664 of a share presuming the acquisition closes following Halliburton’s previously announced 2-for-1 common stock split for shareholders of record at the close of business on the June 26, 1997 record date). Also, options and warrants of NUMAR will be converted into Halliburton common stock securities based upon this exchange ratio. The acquisition will result in the issuance of approximately 4.4 million shares of Halliburton common stock (approximately 8.8 million shares following the 2-for-1 stock split). Approximately 130.9 million shares of Halliburton common stock will be outstanding following completion of the acquisition (261.8 million shares following the stock split). The proposed merger has received unanimous approval from the boards of directors of each company, but is subject to the approval of NUMAR’s stockholders and Hart-Scott-Rodino antitrust clearance. For accounting purposes, the merger will be structured as a pooling of interests and for federal income tax purposes as a tax-free exchange to NUMAR shareholders NUMAR’s directors and other affiliates representing over 25 percent of NUMAR’s shares have agreed to vote in favor of the proposed transaction. The companies anticipate completion of the acquisition during the 1997 third quarter. Dick Cheney, Halliburton Company’s chairman of the board and chief executive officer, said, “The acquisition of NUMAR is a strategic move Halliburton is making to strengthen our position in the $3.2 billion formation evaluation market. NUMAR has established itself as an industry leader with its proprietary MRIL(R) technology which is fundamentally changing the future direction of the marketplace. Halliburton can help NUMAR to accelerate development, delivery and application of the MRIL technology to benefit customers by utilizing Halliburton’s worldwide infrastructure. The technology is currently being applied to a small percentage of wells drilled worldwide, but future growth opportunities are significant.” NUMAR designs, manufactures and markets a patented proprietary well logging device, the Magnetic Resonance Imaging Logging (“MRIL”) tool, which utilizes magnetic resonance imaging (“MRI”) technology, to evaluate subsurface rock formations in newly-drilled oil and gas wells. The MRIL tool measures directly in real time at the wellsite the formation porosity, proportion of fluid in the formation that is free to flow, fluid viscosity and type of hydrocarbons in the pore space, and derived formation permeability. Furthermore, these measurements are accomplished without the use of radioactive sources, which are present in the traditional density and neutron logging tools. Halliburton believes the MRIL technology represents a major breakthrough in wireline logging and that the acquisition of NUMAR will strengthen its position in logging as the MRIL technology is deployed throughout the global Halliburton organization. Over the last two years, Halliburton has been a licensee of NUMAR and, as a result, has had the opportunity to gain insight into MRIL technology, including testing the reliability and performance of NUMAR’s MRIL tools and to verify the level of technological acceptance among a broad cross-section of major customers around the world. While modestly dilutive to near-term earnings per share, Halliburton believes that the transaction will not be dilutive to earnings per share for 1998 as the deployment of further enhancements increases customers acceptance of MRIL technology. NUMAR will operate as a wholly-owned subsidiary of Halliburton Company, and part of Halliburton’s Energy Services business segment. Following the merger, NUMAR’s management team will remain in place with Dr. Melvin Miller continuing as president. Miller said, “NUMAR is highly ambitious in its goal to provide the source of real-time data with which oil and gas companies can better determine the presence of hydrocarbons, the characteristics of rock formations and whether commercial quantities of oil and gas can be recovered. We are delighted to join forces with Halliburton to accelerate and expand the scope and range of MRIL technology throughout the world.” NUMAR has distribution agreements with several service companies for the use of MRIL technology. The company will continue to honor these agreements. NUMAR Corporation was founded in 1983 and maintains its headquarters in Malvern, Pennsylvania. The company has about 140 employees and provides the MRIL service to over 200 oil and gas company customers worldwide. Halliburton Company is one of the world’s largest diversified energy services, engineering, maintenance, and construction companies. Founded in 1919, Halliburton provides a broad range of energy services and products, industrial and marine engineering and construction services.”
• Mid 1997 – Russian-born Alexey Kononenko, receives his Ph.D. from Penn State in 1997 (Note – joins RenTech –gets promotion in 2003 – executed a power play according to Bloomberg article)
• 1997 – Eugene Cheng Graduates Stony Brook university [Joins RenTech?]
• During 1997 – Lalit Bahl leaves job as Manager of Speech Algorithms Group at IBM
• 1997 – Mortgage Backed Derivative Fund James Simons Backed “Swoons” after two good years returns just 3.3%: “Then interest rates moved out of the range projected for many of Matrix’s trades, and the yield curve inverted. In 1997 the fund gained just 3.3 percent;”
• 1997 – James Simons starts fund of funds for ‘excess capital’ [NOTE – THIS IS A RISK FACTOR – SHOWS LACK OF CONFIDENCE IN INTERNAL FUND STRATEGIES]: “Three years ago [from Nov 2000] Medallion formed an internal fund-of-funds to invest in outside managers. In part, the fund was looking for new ways to invest excess capital that investors didn’t want back. Simons also believed the approach would increase Renaissance’s market intelligence and occasionally present opportunities for Renaissance to acquire another fund. Medallion now [as at Nov 2000] has $500 million invested in 40 outside funds, including macro manager Louis Bacon’s Moore Capital Management.”
• 1 February 1998 – Paul Simons article in New York Times – “article on John Ward Melville and the Stony Brook area [‘’Building a Village, Providing a University,’’ Jan. 4] mentioned historic land being sold to private citizens. [EXTRACT – “The organization’s most recent transaction is the sale of a land parcel and a historic home – not part of the commercial real-estate holdings – to James H. Simons, private resident and founder/owner of Renaissance Technologies.” END EXTRACT] One example cited with an obviously negative connotation was that of a 7.5-acre area with a historic home on it to a local businessman, the founder of Renaissance Technologies, James Simons, my father. Contrary to the gist of the article, this land was in fact bought for the purpose of establishing a park and nature preserve in memory of my late brother Paul Simons, who at 34 was killed by a car in a bicycle accident in September 1996 in the Stony Brook area. The sale of the 7.5 acres to the newly established Paul Simons Foundation from the Ward Melville Heritage Organization was aided by Gloria Rocchio, and its deed stipulated a restrictive covenant preventing any future development. This land was bought in conjunction with an additional, almost adjacent, 75.6 acres. This purchase, from the estate of Leighton H. Coleman, was facilitated by the Nature Conservancy and also included a condition barring the land’s development. The 83 acres, all in the village of Head of the Harbor, consisting of forests and fields, is home to a plethora of birds, woodland creatures and amphibians, and will be forever open to the public. It will feature walking paths and a small memorial garden and will be officially dedicated as the Paul Simons Memorial Preserve in a ceremony to be held in the fall of 1998. My family was able to honor the memory of my brother with a beautiful piece of land in a town he loved, and the land was protected, benefiting historians and nature lovers alike. Paul always loved the outdoors and often cycled down the road on which the park is located on his daily 30-mile bike ride. This park was created in the loving memory of him and not, as many may now think, for commercial purposes. NICHOLAS SIMONS Setauket”
• 1998 – Lalit Bahl joins RenTech – “ in 1998, he joined Renaissance Technologies, a hedge fund management company, where he continues to apply his mathematical expertise in statistical modeling and inference for the analysis of the stock market and the automated execution of trades.”
• 1998 – Stony Brook University gains Brookhave Lab Management Contract – with Assistance of James Simons (Note internet link) – “Brookhaven Lab Management Contract Awarded to BSA Battelle/Stony Brook University partnership retains contract it has held since 1998"
• 1998 – Alexey V. Kononenko joins RenTech?
• 1998 – Background – Wakefield MMR-> Autism – British doctor Wakefield make headlines around the globe in 1998 when he claimed a link between the Measles, Mumps and Rubella vaccine and autism. His findings – published in medical journal The Lancet – are believed to have led to widespread concerns amongst parents giving their children the jab.
• 1998 – Alexey Kononenko papers: “Burago, Dmitry; Ferleger, Serge; Kononenko, Alexey (1998), “Uniform estimates on the number of collisions in semi-dispersing billiards”, Annals of Mathematics (Princeton University Press) 147"/ “Burago, Dmitry; Ferleger, Serge; Kononenko, Alexey (1998), “Topological entropy of semi-dispersing billiards”, Ergodic Theory and Dynamical Systems 18 (4): 791"
• 1998 – Matrix loses 20.6% of Assets – RenTech withdraws as co-General partner – some RenTech employees leaves funds invested
• 1998 – Deutsche Bank develops MAPS – a basket option product. the Managed Account Product Structure (MAPS). Over the next 15 years, Deutsche Bank sold 156 MAPS options, of which 96 had terms greater than one year. At their peak, those 96 options had assets with a total initial notional value of about $60 billion. Deutsche Bank sold the MAPS options to 13 hedge funds, including 36 to RenTec. Of those 36 option contracts, the first 29 had terms greater than one year. The MAPS options sold to RenTec produced profits for that hedge fund totaling about $17 billion.
• 1998 – Background- Long Term Capital Management insolvency – Investment losses of USD 4.6bn in four months.
• 1998- 1999 – “In 1998 – 1999, Deutsche Bank acquired NatWest Securities, including the team that had worked on the MAIDS transaction and brought over almost the entire group to help Deutsche Bank establish its Global Prime Services business.188 At Deutsche Bank, the team continued to refine the MAPS structure, using Deutsche Bank’s trading platform to create effective monitoring and risk mitigation systems that would allow a basket option holder to place orders and execute trades directly through Deutsche Bank’s proprietary trading accounts”
• April 1999 – Equimetrics fund started: “U.S. market-neutral, long-short portfolio, started in April 1999 partly to expand Renaissance’s base of institutional investors. Where Renaissance’s traditional strength is rapid trading, Equimetrics hopes to apply the same principles to low-turnover trading. Equimetrics was developed by Robert Frey, its CEO, an eight-year Renaissance veteran who previously worked in the secretive Morgan Stanley & Co. analytical proprietary trading group.”
• 1999 – Lord Jim Trust (James Simons’ family trust) buys shares in Franklin Electronic Publishers Inc.
• 1999 – MyPoints taken public: “Through his partnership in an investment firm called Long Island Venture Fund, Simons is a major shareholder in a dot-com direct marketing operation called MyPoints.com, which was taken public in August 1999 by Robertson Stephens. Simons now has a chance to feel dot-com pain, with the stock trading at 21/2, down 97.5 percent from its 52-week high of 9711/16. – H.L.”
• 1999 – In 1999, Deutsche Bank approached RenTec with the MAPS product. According to RenTec, Deutsche Bank marketed it as a product that offered superior leverage as well as loss protection at a relatively low cost. When RenTec purchased an option, it did not hold the option in its own name, using instead one of its related entities. For the Deutsche Bank basket options, RenTec used a Bermuda corporation, named Franconia Equities Ltd., as the official option holder until 2007, 293 when it replaced the company with a Delaware partnership named Mosel Equities LP (Mosel)
• 1999 –Medallion posts a Q1 0.5% loss
• During 2000 – Matt Andresen mees James Simons re Island a computerized trading hub: “In Wall Street Journal reporter Scott Patterson’s book Dark Pools: High-Speed Traders, AI Bandits and the Threat to the Global Financial System, Patterson recalled a meeting Matt Andresen took with Simons in 2000. Andresen was in the middle of a well-rehearsed pitch for Island, a computerized trading hub, when it occurred to him that Simons didn’t seem to be listening. “In fact,” Patterson wrote, “it seemed as if Simons had dozed off in the middle of Andresen’s presentation … his Merit cigarette burning to a cinder in an ashtray before him.” When Andresen finished, Simons opened his eyes, lit another cigarette, and “proceeded to reel off every single one of Island’s major weaknesses”
• During 2000 – James Simons flies all RenTech employees to Bermuda for Holiday.
• March 2000 – Medallion loses USD350m in 3 days – entire year-to-date (YTD) profit.
• April 2000 – Gala fundraiser at Stony Brook University – James Simons speaks – raised USD1m in funds.
• During 2000 – Alexander Astashkevich (31) joins RenTech: “The Massachusetts Institute of Technology grad left his professor’s job at the University of California, Davis, six years ago for a corporate job [RenTech] that earned him millions annually.”
• 2000 – Serge Ferleger joins RenTech “In 2000, Serge Ferleger left the academic community for Renaissance Technologies.[13]”
• 2000 – RenTec purchases its first Deutsche Bank MAPS option
• At 1 November 2000 – Description of RenTech trading model: “Guided by these models, Medallion’s 20 traders conduct rapid-fire buying and selling of a multitude of U.S. and overseas futures contracts, including all major physical commodities, financial instruments and important currencies, in addition to trading equities and mortgage derivatives. This year Medallion made a killing in the volatile oil futures market […]Renaissance, founded in 1982, has 140 employees, one third of whom hold Ph.D.s in hard sciences. Many have studied or taught in Stony Brook’s math department, which Simons chaired from 1968 to 1976"
• 1 November 2000- James Simons interview with Institutional Investor: “You need to build a system that is layered and layered,” Simons said in a 2000 interview with Institutional Investor, explaining some of the philosophy behind the firm and the Medallion model. “And with each new idea, you have to determine: Is this really new, or is this somehow embedded in what we’ve done already?” Once that’s determined, the team would figure out how much weighting to give it. Signals may eventually go cold over time but will usually be kept around because they can sometimes reemerge – or have unintended consequences if removed. A source says positions are held anywhere from seconds to seasons.”
• At 1 November 2000: Rentech Staffing described: “Today Renaissance has 140 staffers – it plans to be up to 150 by year-end – and trades 60 different financial instruments around the clock. […] That’s why we’re on the third expansion of this” / “Staff turnover is nearly nonexistent. Every six months all employees receive cash bonuses based on fund performance. The six-month benchmark is said to be 12 percent – and it’s almost always easily surpassed. Most employees also hold equity in the firm. Simons frequently takes the entire staff and their families – more than 300 people – on lavish weekend vacations. Earlier this year he flew everyone to Bermuda. […] Renaissance is divided into three basic groups: computer and systems specialists, researchers and traders. Once a week Simons meets with the research group, discussing in detail the progress of trading strategies under development.”
• As at 1 November 2000 – RenTech internal fund of funds described: “Three years ago Medallion formed an internal fund-of-funds to invest in outside managers. In part, the fund was looking for new ways to invest excess capital that investors didn’t want back. Simons also believed the approach would increase Renaissance’s market intelligence and occasionally present opportunities for Renaissance to acquire another fund. Medallion now has $500 million invested in 40 outside funds, including macro manager Louis Bacon’s Moore Capital Management”
• As at 1 November 2000 – Description of RenTech Trading Characteristics: “When the trading starts, the models run the show. Renaissance has 20 traders who execute at the lowest cost and without moving markets, crucial requirements for quant investors trading on narrow margins. But the models decide what to buy and sell. Only in cases of extreme volatility, or if the signals appear to be weakening, does the firm sometimes manually cut back. Says Simons, “We don’t override the models.” […] Even in structuring its hedge fund-of-funds portfolio, Medallion takes a quantitative approach. The fund balances the positions of its outside portfolio to ensure that, overall, the fund has no stock market exposure; it is, in other words, a “beta zero” portfolio. Last year the fund-of-funds, on a risk-adjusted basis, even beat trading returns, posting a higher Sharpe ratio than the 2.31 recorded for the overall fund and accounting for about 7 percent of the Medallion’s revenues. Nevertheless, investing with outside managers poses certain challenges. “We treat these funds as instruments,” says Simons. “But unlike the deutsche mark, managers change their character over time. It’s messier to model those time series, but it’s not impossible. We do our best.” / “Renaissance has also pioneered advanced trading technologies that make it possible to earn money on small margins. When few firms were thinking about electronic trading, a Renaissance subsidiary quietly installed a direct trading link to the German futures exchange. “The world is moving in our direction,” says one Renaissance executive. “If the NYSE went all electronic it would be great for us.”
• As at November 2000 – Description of Trading Characteristics of Equimetrics: “Though Simons won’t reveal the specifics of his trading, it’s possible to get a glimpse of Renaissance’s style by looking at Equimetrics, the U.S. market-neutral, long-short portfolio, started in April 1999 partly to expand Renaissance’s base of institutional investors. Where Renaissance’s traditional strength is rapid trading, Equimetrics hopes to apply the same principles to low-turnover trading. Equimetrics was developed by Robert Frey, its CEO, an eight-year Renaissance veteran who previously worked in the secretive Morgan Stanley & Co. analytical proprietary trading group. All trades in the Equimetrics portfolio are made strictly from proprietary, computer-model-driven strategies, which pick from a universe of about 1,500 highly liquid common and preferred stocks. Typically, the portfolio holds about 1,000 positions, with stock index futures used to adjust the overall risk. No stock is expected to account for more than 5 percent of the portfolio, which will turn over only one to three times per year. The portfolio’s leverage is a modest 2- or 3-to-1. (At the end of the second quarter, Renaissance held stock positions of about $2 billion in all its funds, according to Securities and Exchange Commission filings.) o far the strategy is working. Last year, in nine months of trading after the fund’s April 1999 launch, Equimetrics gained 12.1 percent, compared with 14.2 percent for the S&P 500. But this year, with the index down 2.23 percent through September, the fund was up 24.1 percent; the volatility of the fund has been just two thirds that of the index. An Equimetrics report issued to investors in August, shows the nature of some holdings. As the S&P 500 climbed 6.2 percent and Nasdaq rose 11.7 percent for the month, Equimetrics was up 4.4 percent, holding a portfolio with its highest sector weightings in technology (17 percent long, 14 percent short); industrials (5 percent long, 3 percent short); and energy (9 percent long, 7 percent short). The portfolio’s short positions had a high price-earnings ratio, 26.7, compared with 18.6 on the long side, and long positions were focused on companies with much higher average market capitalizations – $35.8 billion – compared with an average $19.6 billion for the shorts. All sectors had a net exposure of 2 percent or less, except consumer noncyclicals, which had a ­6 percent exposure. “As market indices soared this month, the short positions took losses, but Equimetrics’ long portfolio generated strong returns particularly in technology, financial and energy stocks,” notes the Equimetrics report to investors.”
• As at 2000 – Description of James Simons Venture Capital: “Still active in Latin America as an investor in the Sanford Group, the industrial holding company that grew out of the investments he and his MIT classmates made, Simons visits the region twice a year.” / “Before McKinsey, Mr. Durán worked at the Sanford Group, a leading industrial conglomerate in the Andean region, where he held numerous operating roles at both the portfolio and holding company level, including serving as CFO of Centelsa, the largest telecommunications and electrical cables manufacturer in the Andean region”
• As at 2000 – Description of James Simons Franklin ownership: “Through an offshore trust, Simons, now chairman of New York Stock Exchange ­listed Franklin, owns 22 percent of the company, a stake worth about $16 million. This fall the company is releasing a new multimedia device called eBookman, which will allow users to read and listen to books downloaded from the Internet. “Whether Franklin will someday be a huge success, I don’t know,” shrugs Simons”
• As at 2000 – Mypoint.com collapses in value: “Simons now has a chance to feel dot-com pain, with the stock trading at 21/2, down 97.5 percent from its 52-week high of 9711/16. – H.L.”
• 1 January 2001 – Nova Fund LP established [CONFLICTING DATES WITH PM/CCO JOIN DATES]
• 2001 RenTech employs Russians Alexander Belopolsky, Pavel Volfbeyn: “In 2001, Renaissance hired a Russian scientist who, like many of his peers, came west after the collapse of the Soviet Union: Alexander Belopolsky. Patterson was against bringing him aboard, he says, because he had recently worked on Wall Street, where he had job-hopped. His fears proved prescient. In 2003 he and another Russian, Pavel Volfbeyn, announced they were leaving for hedge fund Millennium Partners, where they’d negotiated healthy bonuses and the right to keep a large part of their own profits. Renaissance sued them and Millennium, worried the researchers would take the firm’s secrets with them. All parties later settled out of court.” https://www.bloomberg.com/news/articles/2016-11-21/how-renaissance-s-medallion-fund-became-finance-s-blackest-box
• Around 2001 – “Around that time another of Renaissance’s Russian-born researchers, Alexey Kononenko, who received his Ph.D. from Penn State in 1997 and had also done a brief stint on Wall Street, was promoted within the equities group. Senior staffers ended up discussing Kononenko’s advancement during one of their regular dinners at Simons’s house. One person familiar with the situation says the scientists were just questioning why he had moved ahead of colleagues who had been there much longer, much the way an academic might complain about a younger colleague getting tenure. Other people with knowledge of the firm say Kononenko’s promotion was a significant event in Renaissance’s history and that the Russian had actually executed a power play.” https://www.bloomberg.com/news/articles/2016-11-21/how-renaissance-s-medallion-fund-became-finance-s-blackest-box
• 2001 – Nick Patterson leaves RenTech: “Patterson, who worked at Renaissance until 2001 and is now a senior computational biologist researching genetics at the Broad Institute of MIT and Harvard.”/ “in 2001, Patterson joined the Whitehead Institute /MIT Center for Genome Research. He briefly worked on gene expression data applied to cancer before switching to the study of human genetics.”/ “By 2000, Dr. Patterson was restless. One day, he ran into Jill P. Mesirov, another former defense institute cryptographer, and mentioned his interest in biology. Dr. Mesirov, then director of computational biology at the Whitehead/M.I.T. Center for Genome Research, which later became the Broad Institute”
• During 2002 – Nicholas Simons goes to Kathmandu: “When the friendly 22-year-old American Nick Simons (pictured) arrived in Kathmandu in 2002 he worked for an NGO in the hydropower sector.”
• 2002 – Behavioural Dynamics Institute & SCL established: “think tank based around the University of Exeter (wiki page)” Note: Seems to be over 15 years old and tightly linked to Behavioural Dynamics Institute.
• 2002 – RenTec purchases further MAPS options from Deutsche Bank.
• 2000–2014, RenTec purchases from Deutsche Bank a total of 29 basket options with terms exceeding one year , All of the basket options were utilized by RenTec’s Medallion funds employing their proprietary algorithmic strategy. LEGAL NOTE: Franconia Equities Ltd. made a similar representation in earlier MAPS options, stating that “the Buyer [of the option, Franconia] agrees that it shall not contact directly the Investment Advisor regarding the terms or subject matter of this Transaction.” 3/14/2002 “OUTPERFORMANCE’ BARRIER OPTION TRANSACTION – Cash Settled, Linear Amortizing Premium – DBSI Reference No. 1244131,” DB_PSI 00123196–208, at 206. Since Franconia was a shell corporation under RenTec’s control, its statement that it would not contact the Investment Advisor – RenTec – does not seem possible. Like the Mosel representation, it was a fiction disguising RenTec’s control over the option holder as well as the option’s trading activity.
• 2002–2014 – Deutsche Bank employees start to join RenTec. Several Deutsche Bank employees who worked with RenTec on the basket option structure moved over to RenTec, including operations personnel, management, and legal counsel. The Deutsche Bank personnel who moved to RenTec included Peter Brophy who worked with Deutsche Bank clients and later handled fund accounting at RenTec; Thomas Kerns, who became head of Fund Accounting and Operations at RenTec and is now retired; James Rowen who became RenTec’s Chief Operations Officer; and Jonathan Mayers who became RenTec’s Counsel. Subcommittee interviews of James Rowen, RenTec (5/20/2014), Thomas Kerns, RenTec (5/6/2014), Peter Brophy, Deutsche Bank (5/13/2014 and 5/19/2014), and Jonathan Mayers, RenTec (5/28/2014)
• 2002 – Barclays develops COLT – The Barclays’ basket options product was developed in 2002, at the request of RenTec, and was named COLT. Barclays sold 43 COLT options to RenTec, of which 31 had terms greater than one year. At their peak, those 31 COLT options had assets with a total initial notional value of about $62 billion. The COLT options produced trading profits for RenTec totaling about $18.5 billion. They also produced revenues for Barclays totaling about $655 million. Barclays Bank PLC New York Branch (BBPLC) and Barclays Capital Inc. (BCI), which is a registered broker-dealer. LEGAL NOTE: BBPLC serves as the consolidation point within the Barclays group for all funding in U.S. dollars.132 It has access to the discount window at the Federal Reserve Bank of New York, and it is funded through external, unsecured financing from BPLC.
• 7 April 2002 – Barclays letter to United Kingdom’s financial regulator – Financial Services Authority (FSA) – 7/4/2002 letter from Barclays to FSA, “PROJECT COLT,” BARCLAYS-PSI-005241–243, at 241 (“Controls exist within the prime [brokerage account] to ensure that the risk of loss is minimized.”)
• 31 July 2002 – Barclays correspondence – “Confidential: Project COLT,” new product proposal, product sponsors Jonathan Zenios, Jerry Smith,Martin Malloy, and Mark D’Andrea, BARCLAYS-PSI-212559–566. Subcommittee interview of Martin Malloy, Barclays (5/1/2014). RenTec told the Subcommittee that, because RenTec wanted to spread its counterparty credit risk with multiple banks, 212 it agreed to do business with Barclays, but only if the bank could develop a basket options type structure.213 Contemporaneous internal Barclays communications indicate that RenTec pushed Barclays to create its own basket options structure, informing the bank that it would move its accounts elsewhere if Barclays did not provide it with a basket options structure.
• 12 August 2002 – Letter from Barclays to UK FSA – 8/12/2002 letter from Barclays to FSA, “PROJECT COLT.” BARCLAYS-PSI-005246–250, at 249
• 13 August 2002 – “Certification of Incorporation,” prepared by the Registrar of Companies of Bermuda for Bass Equities Ltd., RT-PSI-00396344.
• 5 September 2002 – letter from Barclays to the UK Financial Services Authority, “Project COLT,” BARCLAYS- PSI-005260–261. Barclays represented to its regulator, the Financial Services Authority, that the COLT structure “does not give rise to market risk within Palomino Limited. As such it is equivalent to a forward sale.”
• 13 September 2002 – Letter from UK FSA to Barclays “PROJECT COLT,” BARCLAYS-PSI-005258–259”);9/13/2002 letter from FSA to Barclays, “PROJECT COLT,” BARCLAYS-PSI-005258–259 (indicating Barclays had told its U.K. regulator that basket options carried low risks that were comparable to standard brokerage accounts, in part because “[c]redit and operation controls around this transaction are equivalent to those that are in place for a standard prime brokerage transaction.
• March 2003 – Nicholas Simons returns to New York form Kathmandu tells parents he wants to study medicine: “In March 2003 he returned home to New York and told his parents, Jim and Marilyn Simons, how he had grown to love Nepal sharing with them his dream to study medicine.”
• During 2003 – James Simons launches Autism Research Initiative: “”It’s another autism organization begun by a well-heeled philanthropist with an autistic family member,””
• 4 April 2003 – Barclays COLT (Renaissance II) – 4/4/2003 Barclays memorandum from SCM to SCM Approvals Committee, “SCM Approvals paper – Project COLT (Renaissance II),” BARCLAYS-PSI-213947–953, at 949.
• 30 July 2003- Nicholas Simons – James Simons second son, dies by drowning in Bali, ages 24 – “Nicholas, who had been doing volunteer work in Katmandu, drowned at age 24" / “When the friendly 22-year-old American Nick Simons (pictured) arrived in Kathmandu in 2002 he worked for an NGO in the hydropower sector. In March 2003 he returned home to New York and told his parents, Jim and Marilyn Simons, how he had grown to love Nepal sharing with them his dream to study medicine. Before starting his mandatory premedical course in the autumn of 2003, he decided to travel to Bali where he tragically drowned while swimming”
• 3 August 2003 – NY Times death notices for Nicholas Simons– “SIMONS – Nick, suddenly on July 30, 2003. Beloved son of Marilyn and James. Dear brother of Elizabeth, Nathaniel and Audrey. Services Monday, August 4, 11 AM, at Temple Emanu-El, Fifth Avenue at 65th Street. SIMONS – Nicholas. The Officers, Trustees, Clergy and Members of Park Avenue Synagogue mourn the untimely passing of Nicholas Simons beloved son of Marilyn and James Simons. We extend to Audrey, Liz, Nat and the entire family our heartfelt sympathy. David H. Lincoln Senior Rabbi Amy A.B. Bressman Chairman of the Board Menachem Z. Rosensaft President SIMONS – Nick. The entire Continuum Health Partners family mourns the untimely death of Nick Simons, beloved son of our friends and generous donors, Marilyn and Jim Simons. Our heartfelt condolences are extended to the Simons family. Morton P. Hyman Chairman, Board of Trustees John Hill Chairman Development Committee Stanley Brezenoff Pres and CEO, Continuum Thomas Killip, MD Interim President and CEO Beth Israel Medical Center Richard Daines, MD President and CEO St. Luke’s-Roosevelt Hospital Center SIMONS – Nick. The Board of Trustees, faculty, and staff of The Rockefeller University extend our heartfelt sympathy to Marilyn and Jim Simons on the sudden and untimely loss of their beloved son Nick. The University community is deeply saddened by this devastating tragedy, and we send our support and love to Marilyn, Jim, Audrey, Liz and Nat. David Rockefeller, Honorary Chairman Richard B. Fisher, Chairman of the Board Thomas P. Sakmar, Acting President Paul Nurse, President-elect The Rockefeller University SIMONS – Nick. The staffs of the Beth Israel Medical Center Department of Medicine and the St. Luke’s-Roosevelt Hospital Center Comprehensive Breast Service are deeply saddened by the death of Nick Simons, beloved son of our generous benefactors, Marilyn and Jim Simons. We extend our deepest sympathy to Marilyn, Jim and their family. Martin Feuer, MD Attending Physician Department of Medicine BIMC Alison Estabrook, MD Chief, Comprehensive Breast Service SLRHC SIMONS – Nick. Congregation Emanu-El of the City of New York expresses profound sympathy to the family of Nick Simons. Taken from this life much too soon, our hearts reach out with compassion and understanding. May his beloved parents and family find comfort in the sweetness of memories from a life that was beautiful but much too brief. Rabbi David M. Posner Robert A. Bernhard, Pres. Herbert C. Bernard, Sec’y SIMONS – Nick. The entire Churchill School and Center family extends its heartfelt sympathies and condolences to Jim and Marilyn Simons on the tragic loss of their beloved son Nick. Our hearts go out to Audrey, his dear sister, and to the entire family. Emily H. Fisher, Chair of Board of Trustees Kristine Baxter, Head of School and Center SIMONS – Nick. The Board, staff & entire LearningSpring Elementary School community extends its deepest and heartfelt sympathies to Jim and Marilyn Simons, our devoted President and guiding light, on the sudden and tragic loss of their son, Nick. Our hearts go out to Audrey, Liz, Nat and the entire family.”
• 2003 – Alexey Kononenko- executes power play around time Alexander Belopolsky and Pavel Volfben leave and are promoted ahead of colleagues who had been there longer: “Renaissance sued them and Millennium, worried the researchers would take the firm’s secrets with them. All parties later settled out of court. Around that time another of Renaissance’s Russian-born researchers, Alexey Kononenko, who received his Ph.D. from Penn State in 1997 and had also done a brief stint on Wall Street, was promoted within the equities group. Senior staffers ended up discussing Kononenko’s advancement during one of their regular dinners at Simons’s house. One person familiar with the situation says the scientists were just questioning why he had moved ahead of colleagues who had been there much longer, much the way an academic might complain about a younger colleague getting tenure. Other people with knowledge of the firm say Kononenko’s promotion was a significant event in Renaissance’s history and that the Russian had actually executed a power play.”
• December 2003 – Renaissance sues Alexander Belopolsky and Pavel Volfben
• 5 August 2004 – 8/5/2004 “Certification of Limited Partnership of Badger L.P.,” prepared by the Delaware Secretary of State, RT-PSI-00396317
• 19 February 2004 [N] Consider whether this is a related entity –> ICIJ Palomino Limited https://offshoreleaks.icij.org/nodes/10042475
• 2 September 2004 – COLT V – Renaissance Restructuring – 9/2/2004 Barclays memorandum from Jonathan Zenios to Barclays’ SCM Approvals Committee, “Approvals paper – COLT V: Renaissance Restructuring,” BARCLAYS-PSI-004161–165, at 164 (describing the risk to the bank from the COLT options as “akin to the risks taken in a normal collateralized Prime Brokerage relationship, where the risks generally are confined to catastrophic losses occurring over a short period of time”)
• [QUESTION – WHY THE RESTRUCTURING]
• 3 September 2004 – COLT V – Zenios Paper – 9/3/2004 Barclays memorandum from Jonathan Zenios to SCM Approvals Committee, “Approvals paper – COLT V: Renaissance Restructuring,” BARCLAYS-PSI-004161–165
• Approximately February 2005 – RenTech employee Alexander Astashkevich and his wife- Olga Astashkevich split up – See Feb 2006 for Murder.
• Spring 2005 – SCL Defence and the Behavioral Dynamics Institute offered a course in Latvia at the NATO Center of Excellence for Strategic Communications. IOTA-Global also offered courses in Ukraine, Georgia, Moldova[212].
• 2005 – Last external investor bought out of Medallion fund
• 2005 – Renaissance Institutional Equities Fund (RIEF) was created. RIEF has historically trailed the firm’s better-known Medallion fund, a separate fund that only contains the personal money of the firm’s executives. [NOTE THIS IS A KEY RISK FACTOR]
• 19 October 2005 – consider whether this is a related entity -> Palomino Limited – striking off – https://offshoreleaks.icij.org/nodes/10042475
• 21 December 2005 – Barclays Bank PLC letter agreement with Badger Holdings L.P., “Option HH,” BARCLAYS-PSI-002879–896. LEGAL NOTE: trading executions by RenTec were required to be in compliance with the investment guidelines for the account in order to be included in the valuation of the account. See e.g., 12/21/2005 Barclays Bank PLC letter agreement with Badger Holdings L.P., “Option HH,” BARCLAYS-PSI-002879
• 21 February 2006 – Palomino Limited is incorporated – Company Number FC 026961 C/O Walkers Spv Limited, Walker House, Po Box 908gt, Mary Street, George Town, Grand Cayman, Cayman Islands
• 28 February 2006 – Alexander Astashkevich, RenTech researcher kills himself and estranged wife, leaving son alive: “A brilliant MIT math whiz, sparring with his estranged wife over money, shot her to death at her luxury Long Island home yesterday – as the couple’s terrified 6-year-old son told a 911 operator: “Daddy shot Mommy!” The panicked child then locked himself in the bathroom and heard another gunshot – from his suicidal dad blowing his brains out – before cops rescued him. The bloody horror unfolded at around 1:50 p.m. in the pricey apartment complex at 60 Pinnacle Drive in Port Jefferson, Suffolk County cops said. Police said the crazed 36-year-old dad – who sources and coworkers identified as Alexander Astashkevich – pulled up to the curb of the complex in a black 2000 Mercedes and loudly knocked on the door of his wife’s apartment, armed with a 12-gauge shotgun. “The mother was shot immediately as she opened the front door,” said Detective Lt. Jack Fitzpatrick. Astashkevich then stepped over the lifeless body of his 31-year-old wife, Olga, and went upstairs to see their son, Arthur, a source said. Although the boy was a flight up, authorities said he “might have seen his mom killed,” one source said. The dad then “sat the boy down, and told him that he was going to kill himself,” Fitzpatrick said. The father also confessed to the child that he had just killed the mother, police said. At some point, Astashkevich, a Russian immigrant, picked up a cordless phone, dialed 911 “and tried to tell them he killed his wife,” a source said. But he wound up handing the phone to his son. “The dispatcher told the boy ‘to get in the bathroom immediately,’ which he did,” Fitzpatrick said. From inside the locked bathroom, Arthur reported the slaying of his mom to the operator, who kept the boy on the line. The child then heard another shot – and told the operator he thought his dad had just killed himself. When cops arrived, they saw the mother’s bloody body sprawled in the ground-floor vestibule. Suffolk Emergency Services officers stormed the house, where they found Astashkevich dead inside an upstairs bathroom, the shotgun by his side. He had shot himself once in the head, sources said. Arthur was found still locked in the other bathroom. The child later told cops that his parents, who had split about a year ago, fought a lot. One neighbor said cops pulled up to the home only the night before, apparently on a domestic-dispute call. “I saw her [that same] night taking out her trash,” the resident said of Olga. “She looked really paranoid, afraid.” Astashkevich’s boss, hedge fund mogul Jim Simons, said his employee “was quite well off” but added, “I think money was an issue between them. “He was estranged from his wife, and obviously under some kind of terrible strain,” said Simons, the head of Renaissance Technologies, where Astashkevich worked as a researcher. “He seemed like a good father . . . He seemed like a loving parent. But obviously, something terrible happened.” Simons said Astashkevich received his Ph.D. in mathematics from the Massachusetts Institute of Technology. Astashkevich lived in a one-bedroom, luxury pad near his family so that he could still see his son, one neighbor said. “He was a very friendly guy. He didn’t seem like he had any problems,” the neighbor said. Police said they were not officially releasing names until they notified the couple’s next of kin, who are believed to be in Russia. Additional reporting by Kate Sheehy”Orphaned boy faces murky fate BY MICHAEL WHITE and BRIAN HARMON DAILY NEWS WRITERS Murder and suicide took his mom and dad. Now, with no known relatives in the U.S., 6-year-old Arthur Astashkevich may lose his country, too. What had promised to be a life of private schools and privilege in a wealthy Long Island enclave has turned into a tragic tale that could land the boy in Russia with family he barely knows. Arthur’s father, rich mathematician Alexander Astashkevich, 37, shot and killed his estranged wife Monday in Port Jefferson, L.I., in front of their only child. Then Astashkevich turned the shotgun on himself. Family friends said the otherwise “kind and gentle” Russian immigrant may have cracked under the pressure of his impending divorce and a high-stakes job researching investment trends for Renaissance Technologies Corp. in East Setauket, L.I. “He was really in love with his child and wanted the best for him,” said a family friend who asked not to be named. “He was sort of reclusive … and awkward, the way mathematicians are awkward. That’s why I can’t fathom that he would do this.” The Massachusetts Institute of Technology grad left his professor’s job at the University of California, Davis, six years ago for a corporate job that earned him millions annually. But riches are little consolation to his orphaned son. Suffolk cops, who yesterday notified relatives of both Astashkevich and his wife, Olga Sadikova, 31, in Tomsk, Siberia, said Arthur’s extended family lives in Russia. Sources said the families are very close and that Arthur’s grandparents are en route to Long Island to bring the bodies back to Russia. But Arthur, living in foster care, probably isn’t going anywhere soon. His parents were separated and both had formally identified potential legal guardians for the boy. Even if the parents picked family members, authorities would need to conduct extensive background checks before releasing the boy, said Dennis Nowak of Suffolk County Social Services. Originally published on March 1, 2006 Abstract from NY Post: Astashkevich then stepped over the lifeless body of his 31-year- old wife, Olga, and went upstairs to see their son, [Arthur Astashkevich], a source said. Suffolk Emergency Services officers stormed the house, where they found Astashkevich dead inside an upstairs bathroom, the shotgun by his side. “He was estranged from his wife, and obviously under some kind of terrible strain,” said [Jim Simons], the head of Renaissance Technologies, where Astashkevich worked as a researcher.”
• During 2006 – Jim Simons starts fund Nepal projects – http://nepalitimes.com/news.php?id=11436
• During 2006 – Vladimir Novakovski joins hedge fund industry – see 2014 note.
• 16 November 2006 – Robert Mercer posts on Linux Forum: “Look, I hate hearing the “if you don’t like it, it’s free, so shut up.” Look, if I had the slightest inclination to write a program from scratch, in C++ (My home language) I wouldn’t be writing this, I’d be sitting at a software company somewhere, earning money. Look, a lot of us don’t have the time (myself) the knowledge (90% of PC users), or the intestinal fortitude (Have you ever tried to bug-test a complete C++ program? It gives most programmers nightmares) to try and write a program from scratch. Hell, most programmers don’t know where to start when confronted by something that massive. If Linux is ever going to become popular in the general PC world, it’s going to have to offer programs that can compete with Microsoft. What, you think Microsoft got where they are because they make useless crap? No, they are a multi-billion dollar company because they make what most people want. Agreed, we as the Tech Snobs of the PC world don’t like the “bloat” and “needless features,” but I have to admit, most people seem to like it. As a PC user, I would love it if all of my games ran under Linux (and no, I don’t trust emulators like WINE, they eat performance like a cat eats salmon) without an emulator. I would love it more, however, if Linux used a file manager that made sense (First time I booted a Linux distribution – Back|Track, based on Linux Live – I spent god knows how long trying to find the equivalent of Windows Explorer). If we can make a user friendly Linux, with file menus that make sense, file explorers that are usable, and native support for Windows applications, we’ll be all set. We just need to make that happen. Now, where did I put my books on C. And why the heck doesn’t this email box support plus-addressing”
• 6 December 2006 – Barclays RenTec. “Amended and Restated Investment Management Agreement,” signed by Barclays and RenTec, RT-PSI-0013496 – Barclays offered a leverage ratio of up to 20:1. Barclays COLT options authorized the bank to take over the account and liquidate the assets when the losses extinguished the entire premium. 12/6/2006 “Amended and Restated Investment Management Agreement,” signed by Barclays and RenTec, RT-PSI-00134963. The Investment Management Agreement contained certain limits and guidelines on what could be selected for the account. For example, RenTec could invest only in stocks from a limited set of countries, and no single position could constitute more than 1.5% of the outstanding shares of a company or more than 55% of the total equity in the account. Otherwise, RenTec had complete discretion to identify assets to be acquired for the portfolio. If an order placed by RenTec was not executed, or subsequently undone without orders from RenTec, the assets were still considered part of the reference account for purposes of considering the gain or the loss to Badger. Id. at 9.
• During 2007 – James Simons starts recruiting researches to Autism Research Initiative
• During 2007 – Robert Mercer starts funding Media Research Centre / CNS News
• 20 June 2007 – RenTek and Millenium partners settle lawsuit over Russian Physicist hires – Millenium did not admit liability, paid USD20m, and agreed to fire Mr Belopolsky and Mr Volfbeyn and to not rehire or affiliate with them again. RenTek continues litigation against the 2 individuals.
• 31 June 2007 – RenTec was reorganized and converted into a limited liability company called Renaissance Technologies Corporation LLC (RTC). Renaissance Technologies Corporation LLC (RenTec), a Delaware limited liability corporation, is a SEC-registered investment adviser. REORGANISATION -> At that time stockholders of the S-Corporation received shares in a new entity known as Renaissance Technology Holdings Corporation (RTHC). RTHC then acquired the same number of class A member interests in RTC. In addition, another entity was created at that time called RCT II Holdings LLC (RCT II), which became the sole holder of Class B interests in RTC. Class A and B interests are identical and have the same voting and economic rights. RTC II was created to permit newer employees to hold an ownership interest in Renaissance Technologies LLC. Current ownership of RTC is split, with 85.7% held by RTHC and the remaining 14.3% held by RTC II.
• 2007 – RIFF Fund starts [likely after June 2007 – Closes Oct 2015 – see Blackrock Investors Note]. The minimum initial investment in RIFF was $20 million. 4/15/2008 Confidential Private Placement Memorandum, prepared by RenTec, “Renaissance Institutional Futures Fund SICAV P.L.C.,” RT-PSI-00386466–513, at 470
• August 2007 – “James Simons’ $29 billion Renaissance Institutional Equities Fund fell 8.7% in August 2007 when his computer models used to buy and sell stocks were overwhelmed by securities’ price swings.” / ”The two-year-old quantitative, or ‘quant’, hedge fund now has declined 7.4 percent for the year. Simons said other hedge funds have been forced to sell positions, short-circuiting statistical models based on the relationships among securities.”
• 16 December 2007 – Deutsche Bank Mosel Equities LP – Outperformance Barrier Option transaction. For the Deutsche Bank confirmations, see, e.g., 12/16/2007 Deutsche Bank letter agreement to Mosel Equities L.P., “‘OUTPERFORMANCE’ BARRIER OPTION TRANSACTION – Cash Settled, Linear Amortizing Premium – DB Reference No. 941–50053,” DB-PSI 00000320- 337, at 327.
• Year End 2007 – Medallion performance 85.9% gain
• 5 February 2008 – 2/5/2008 email from Adrienne Browning, Deutsche Bank, to Steven Purvis, Deutsche Bank, “do you remember…….,” RT-PSI-00062957–959, at 959. “Do you remember … What the analysis was for the following proposal: a MAPS (managed account) option, where the underlying assets were CFDs [Contract for Differences, a contract similar to a Total Return Swap] traded by DBL/UK. DBL would hire an investment advisor to trade the account, the assets of which are CFDs, and write an option on the account to a hedge fund. It is my understanding that we didn’t do the trade due to UK regulatory/tax restrictions. Do you recall the rationale?”
• 5 February 2008 – 2/5/2008 email from Steven Purvis, Deutsche Bank, to Adrienne Browning, Deutsche Bank, “do you remember…….,” RT-PSI-00062957–959, at 958. “W]hat you described faced some general objection where DB could be argued to have been effectively fronting for an unregulated fund, i.e., trading carried ostensibly in the name of DB as counterparty but the reality being that a third party fund was (a) actively trading and (b) DB on limited risk and (c) manager only partially subject to DB oversight. Not thought to be a good idea then and following the Soc. Gen. fiasco I imagine there would be even more twitching now.”
• 6 February 2008 – Confidential Private Placement Memorandum, prepared by RenTec, “Renaissance Institutional Equities Fund LLC,” RT-PSI-00385993–6124 – The RIFF fund was started in 2007, with the objective of receiving target returns of 15% per annum. 2/6/2008
• 3 March 2008 – Barclays buys ExpoBank – Deal announced immediately after Mededev presidential election ‘victory’ USD 745m: “Barclays today spiced up its image when it agreed to buy a Russian bank whose staff have posed for a saucy 2008 calendar.” / Barclays struck a £373 million deal for its Moscow-based rival, Expobank, as it looks to expand in emerging markets. However, the calendar featuring scantily-clad women employees ranging from secretaries to senior executives and top economists, will raise eyebrows in the City. […] The deal came just hours after Dmitry Medvedev surged to a landslide victory in Russia’s presidential elections, claiming more than 70 per cent of the vote over the weekend.”
• 7 April 2008 – Confidential Private Placement Memorandum, prepared by RenTec, “Renaissance Institutional Equities Fund LLC,” RT-PSI-00386514–741, at 522, 531 – The RIEF fund was started in 2005, with the objective to achieve superior rates of return with low volatility. The minimum initial investment in RIEF was $20 million. 4/7/2008
• 15 April 2008 – Confidential Private Placement Memorandum, prepared by RenTec, “Renaissance Institutional Futures Fund SICAV P.L.C.,” RT-PSI-00386466–513, at 470
• 13 June 2008 – 6/13/2008 Barclays Bank PLC letter agreement with Badger Holdings L.P., “Option RR,” BARCLAYS-PSI-000345–363, at 45.
• 24 June 2008 – 6/13/2008 Barclays Bank PLC letter agreement with Badger Holdings L.P., “Option RR,” BARCLAYS-PSI-000345–363, at 45
• 24 June 2008 – Nova Fund LP Finra registration is withdrawn [THIS IS A KEY DATE – FINRA REGISTRATION WITHDRAWN BECAUSE NO AUDIT TRAILS FOR TRADES – THE PORTFOLIO MANAGERS RESPONSIBLE…GO ON TO BECOME THE CO-CEO’S OF THE FUND]
• During 2008 – David Magerman takes a hiatus from employment with Renaissance Technologies LLC
• 2 July 2008 – 7/2/2008 email from Rafal Medak, Barclays, to Nidhi Bajaj, PricewaterhouseCoopers, “Palomino’s PB accounts,” BARCLAYS-PSI-632060–063, at 061 – “Generally, Palomino and Barclays do not share in any gains in the value of the account, because any such gains are paid away to Badger under the Options.” 304
• 11 July 2008 – “Statistical Arbitrage in the U.S. Equities Market,” prepared by Marco Avellaneda and Jeong-Hyun Lee, at 1–2, http://math.nyu.edu/faculty/avellane/AvellanedaLeeStatArb071108.pdf. “StatArb analyzes historical relationships between related securities and trades when those relationships are determined to be unbalanced”
• 11 August 2008 – 8/11/2008 referral letter from SEC to IRS, “Portfolio Option Strategies,” prepared by SEC, SEC_RT13 [THIS IS A KEY DATE – FINRA PROBLEMS -> REFERRAL TO SEC]
• 25 September 2008 – SEC Short-Selling disclosure rule – Renaissance wrote a comment letter to the Securities and Exchange Commission, discouraging them from implementing a rule change that would have permitted the public to access information regarding institutional investors’ short positions, as they can currently do with long positions. The company cited a number of reasons for this, including the fact that “institutional investors may alter their trading activity to avoid public disclosure.
• [Precise date?] 2008 Deutsche Bank restructured the MAPS option, and its hedge fund clients stopped purchasing new basket option contracts, except for RenTec.
• 30 October 2008 – Key Date – Russia Bails out Friedman’s Alfa Bank
• 30 October 2008 – Satoshi emailed the first draft of the bitcoin paper to the cryptography listserv. Is bitcoin a response to bailouts?

1. ASSOCIATED PRESS – They amassed some of the world’s biggest fortunes in the wild privatizations of Russia’s post-Soviet chaos and the oil boom that followed. Now some of Russia’s richest men are facing the choice of losing some of their empires or pleading at the Kremlin’s doors for a bailout. Mikhail Fridman, one of the original oligarchs of the 1990s, was the first to come forward. His Alfa Bank said Friday it was seeking $400 million in government loans to stave off foreign creditors. The cash would allow the bank to avoid handing over its 44 percent stake in the major Russian mobile phone company VimpelCom, which it pledged to a group of foreign banks led by Deutsche Bank as collateral for a $2 billion loan. But to get the money, Fridman and the other oligarchs lining up for government loans are expected to have to hand over to the state as collateral the stakes in their companies that they used to secure the foreign loans. And they may find the Kremlin attaching other strings as well. Such moves could clear the way for the Kremlin to reclaim some of the prize assets it lost in the 1990s and further tighten its hold on Russia’s economy _ or simply tighten its embrace of the business moguls. It would be a reverse of the controversial privatization deals that gave the oligarchs their start. In the deals, known as “loans for shares,” the oligarchs took major stakes in state-owned oil and metals companies as collateral for loans to the government. The loans were never paid back. In recent years, many of the wealthy businessmen borrowed heavily abroad, often using their firms’ stock as collateral. When Russian stocks plunged over the past few weeks, their creditors began demanding that they put up more collateral or risk losing their shares. To prevent the shares from falling into foreign hands, the government offered a total of $50 billion through state-owned bank VEB to help refinance the foreign debts. VEB, which said it has received applications for double that amount, announced Wednesday that it had approved the first loans, totaling nearly $10 billion. Alfa Bank’s Fridman, who is also a co-owner of the British-Russian oil company TNK-BP, is considered among the best positioned and financially secure of Russia’s oligarchs, and thus at little risk in seeking government help. However, James Fenkner, director of Red Star Asset Management, noted that if the problems continue and Alfa is unable to pay back the loan, “the collateral has nowhere to go but back to the state.” Peter Halloran, CEO of the hedge fund Pharos Fund, said he was unable to predict the outcome of the government bailout deals, but he expressed confidence the oligarchs would rather start pumping oil with their own hands than lose their assets. “It will be the No. 1 priority for them to avoid losing their stakes,” he said. No recipients have been identified, but among those bidding for state financing is metals magnate Oleg Deripaska. His aluminum company, Rusal, is reported to have been given a $4.5 billion loan. Russia’s Audit Chamber said Friday it would check how Rusal uses the VEB loan. VEB, however, still could not confirm whether Rusal had secured one. Russian officials have denied any plans to take over private assets. Prime Minister Vladimir Putin said Wednesday that “the expansion of the government’s presence in the economy is a forced measure that is of a temporary nature.” Ronald Nash, chief strategist at Renaissance Capital, said he was taking the government’s statements at face value. “I don’t think what the government wants from companies that go to VEB is more than for these companies to continue to grow and help the Russian economy grow,” Nash said. Russian companies have been forced to borrow abroad because of an absence of sufficient savings at home, he said, and “what the government is doing now is a very positive reaction.” “They are re-liquifying the domestic economy, whether that’s depositing money directly with state banks, or whether that’s making it that much easier for domestic banks to borrow against their assets, or whether it’s pumping money into VEB to roll over the outstanding foreign debt of the Russian companies,” Nash said. But in the process, the government may get the power to decide whom to save _ and on what terms. Fenkner said this could radically change Russia’s corporate landscape. “The state will end up owning big chunks of Russian industries” if commodity prices _ a key source of Russian oligarchs’ wealth _ do not go up again, Fenkner said. Dependence on state funds is not likely to make the oligarchs any more complaisant, he said. Their loyalty was secured long ago with the jailing of Yukos oil chief Mikhail Khodorkovsky. http://www.sandiegouniontribune.com/sdut-eu-russia-oligarchs-10-31-08-2008oct31-story.html
2. REUTERS – Russia has spent $8 billion from its foreign exchange reserves to help some of its richest men to refinance foreign debts and the names of the recipients give a clue to the Kremlin’s favorites. But the reserves are not being sacrificed for free. The billionaires have transferred stakes in some of their most prized firms from Western banks to the Russian state as collateral, handing the Kremlin the means to grab the assets should the oligarchs fail to repay loans or fall out of favor. Russia has spent $8 billion from its foreign exchange reserves to help some of its richest men to refinance foreign debts and the names of the recipients give a clue to the Kremlin’s favorites. But the reserves are not being sacrificed for free. The billionaires have transferred stakes in some of their most prized firms from Western banks to the Russian state as collateral, handing the Kremlin the means to grab the assets should the oligarchs fail to repay loans or fall out of favor. “The turmoil provides an opportune moment for the state to get a little closer to the equity that was sold in the 1990s,” said Michael Kavanagh, metals analyst at UralSib. State-owned Development Bank, also known as VEB, has been entrusted by the Kremlin to distribute a $50 billion rescue package, helping Russian companies to refinance a total of $120 billion of Western loans by the end of 2009. The first round of payouts has already been approved. VEB disbursed $2 billion to Mikhail Fridman’s Alfa Group to help it pay back a loan to Deutsche Bank and rescue Alfa’s 44 percent stake in Russia’s No. 2 mobile phone firm, Vimpelcom, which was used as collateral with the bank. Fridman joined Oleg Deripaska, Russia’s richest man, who this week became the first billionaire to get state support in refinancing his foreign debts. VEB has said no company would get more than $2.5 billion, but Deripaska’s aluminum major, United Company RUSAL, received $4.5 billion to pay back debt to foreign banks, which it amassed to buy 25 percent in mining giant Norilsk Nickel. “It is possible that neither Alfa nor UC RUSAL will find fresh cash to repay the VEB loans, and the state could eventually get the stakes in both Norilsk Nickel and Vimpelcom,” analysts from UniCredit Aton said in a note. Russian billionaires became fabulously rich in the 1990s during the so-called loan-for-shares schemes when they lent money to the state and got stakes in prized firms as collateral. The state never paid back the loans, allowing future tycoons to become owners at a fraction of the real value. “Today, it’s almost like a reversal of the shares-for-loans scheme,” said Kavanagh at UralSib. The idea of another round of property nationalization or redistribution now seems appealing even to some rich. “Why did Deripaska get the money? I don’t understand why?” said banker Alexander Lebedev, a former Soviet spy who was once stationed in London at the Soviet Embassy. He said he did not ask for help and was outraged by the distribution of reserves. “You should just tell the population you got cheated in the 1990s, they gave it all to these chaps who have now just brought it back again. Then you could privatize these assets in a few years, but privatize them in the proper way,” he said. Lebedev is not the only one worried by the fact that Russian reserves are being eaten into. Economists, politicians and ordinary Russians see them as a key defense for the country as it tries to withstand the global turmoil. But demands on the cash pile, accumulated during a period of high oil prices, are rising fast as the central bank spends billions of dollars per week to support the currency. Budget social spending is set to rise sharply in 2009. Reserves fell by $31 billion in the latest week, moving below the $500 billion mark for the first time in eight months. Traders said some $13 billion was spend on propping up the rouble. Some of the drop occurred because of the dollar rally last week versus the euro but a big chunk flew away as money was transferred to VEB. Industry sources said state oil major Rosneft received around $800 million in refinancing aid. Russian media reported that railway monopoly RZhD and top developer PIK Group received $270 and $300 million respectively. Analysts said the ultimate goal of the giant $4.5 billion help to RUSAL would long interest the market. “The major question is the price that UC RUSAL will have to pay for such generosity,” Troika Dialog analysts said in a note. The state could force RUSAL and Norilsk to merge, retaining a stake in the combined company. By Dmitry Zhdannikov and Darya Korsunskaya | MOSCOW http://www.reuters.com/article/us-russia-bailout-idUSTRE49T6GN20081030
3. NYTIMES – MOSCOW – Companies belonging to two of Russia’s richest men are among the first recipients of a $50 billion bailout program. The project, like so much else here, is opaque in its details but has resulted in some of the nation’s oil windfall being funneled to well-connected Kremlin insiders. Under the plan being put in motion this week, money is channeled through the state development bank Vneshekonombank, known as VEB, whose chairman is Russia’s prime minister, Vladimir V. Putin. The stated goal is to help Russian industrialists refinance loans to Western banks, with aid flowing quickest to those companies at risk of having assets seized as collateral by foreign owners. Critics charge that the bailout is another example of the cronyism here and a lack of transparency. In the largest loan to come to light so far, Rusal, the aluminum and mining company of the billionaire Oleg V. Deripaska, Russia’s richest man, was awarded $4.5 billion to repay a syndicate of Western banks led by PNB Paribas. Without the loan, Mr. Deripaska, who is seen as a close ally of Mr. Putin, could have been compelled to surrender 25 percent of the Norilsk Nickel company, which he had put up as collateral. Separately, Mikhail M. Fridman, the principal partner in Alfa Group, an investment company, was granted a $2 billion letter of credit from VEB that rescued the most valuable asset in the group’s telecommunications holdings, VimpelCom, which is listed on the New York Stock Exchange and operates under the Beeline brand in Russia. By Friday, shares pledged as collateral for a loan from Deutsche Bank had fallen below the triggers for margin calls, and the bank could have seized the 44 percent stake in VimpelCom in what would have been a major blow to the Alfa Group. “They were minutes away,” from losing the company, said a representative for a large European company familiar with the talks. Mr. Fridman had called Deutsche Bank executives on Friday, after shares dropped below the trigger point, asking for additional time in a gentlemen’s agreement, said the executive, who did not want to be named discussing confidential talks. Deutsche Bank agreed. But on Monday, a judge in the Siberian city of Omsk had issued a surprise injunction freezing trades in VimpelCom shares owned by Altimo, Alfa telecom’s subsidiary, essentially preventing Deutsche Bank from accessing its collateral even if it wanted to. The case was unrelated to the loan negotiations, but the timing was suspicious, according to the European executive. By Tuesday, the loan guarantee was in place and on Wednesday the court released the shares. By Thursday, VEB had awarded about $10 billion of the $50 billion bailout package, according to the authorities, though the recipients had not been formally identified. The Alfa Group, led by men on Russia’s Forbes magazine list of the country’s wealthiest individuals, may be among the larger recipients as their other businesses are in line for state bailouts, too. A deputy prime minister, Igor I. Sechin, said energy companies including TNK-BP, partly owned by Alfa, would receive $9 billion to help refinance Western bank debt. The group owns the X5 grocery store chain, also seen as likely to win a state loan. http://www.nytimes.com/2008/10/31/business/worldbusiness/31oligarch.html

• 2008 – Deutsche Bank increased the fee to give it the appearance of being in the range of a standard fee, but continued to deduct it from the trading profits in the option account.
• 18 November 2008 – Barclays – Legacy Lehman relationship with RenCap 11/18/2008 memorandum prepared by Barclays, “Renaissance Technologies Corp Prime Services Brief on existing BarCap relationship and legacy Lehman relationship,” BARCLAYS-PSI-018701–704.
• 19 November 2008 – Colin Massin email to Daniel Koranyi – DB counter – Email from Daniel Koranyi, RenTec, replicated in 11/19/2008 email from Colin Masson, RenTec, to Daniel Koranyi, “DB counteroffer,” RT-PSI-00368695–697
• 15 December 2008 – Deutsche Bank Rentec Master Investment Advisory Agreement – Deutsche Bank MAPS options authorized the bank to take over the account and liquidate the assets when the losses hit a threshold level equal to a specified portion of the premium, Pursuant to the 1992 ISDA Master Agreement as supplemented in December 15, 2008, a designated position was any position “reject[ed],” “unwound,” or “liquidated” by the Client “without the direction of the Advisor.” 12/15/2008 “Master Investment Advisory Agreement: Execution Copy,” signed by Deutsche Bank and RenTec, DB- PSI 00000001–047, at 002–003. The investment advisory agreement also stated: “[T]he Advisor shall … have full power, authority and right to … supervise and direct the investment and reinvestment of all assets in the Accounts, and engage in such transactions on behalf of the Client’s Account, in the Advisor’s discretion and without prior consultation with the Client, subject only to the terms of this Agreement ….” Id. at 001–002.
• 15 December 2008 – Deutsche Bank RenTec ISDA Master/Schedule updated & Master Investment Advisory Agreement entered into. That provision would have allowed Deutsche Bank to terminate the contracts, using a method that would have required it to terminate one account at a time with a gap of twenty exchange business days between each account. See 12/15/2008 “Master Investment Advisory Agreement: Execution Copy,” signed by Deutsche Bank and RenTec, DB-PSI 00000001–047, at 006.
• 2008 – END OF RENTEK’S NO AUDIT OF OPTIONS TRACKING ISSUE [CHECK FINRA & SEC ACTIONS] – from 1999 to 2008, they did not keep track of assets on a per-option basis. Instead, the assets from multiple options were pooled together in a single proprietary trading account opened in the name of the bank. Once assets were added to the pool, they lost their identity as being associated with a particular option. Thereafter, to determine its profits, each individual option was viewed as having claim to a specified percentage of the overall portfolio of assets. From 1998 to 2008, in the old MAPS system, Deutsche Bank pooled all of the assets purchased through multiple basket options and hired RenTec as the investment advisor for the account containing all of those assets. RenTec told the Subcommittee that the same account simultaneously served as the bank’s hedge for all of the outstanding options. In 2008, as part of Deutsche Bank’s restructuring of the MAPS option, Deutsche Bank created a new system that purported to divide up the holdings for each separate option and assign the assets for each option to a separate subaccount. At the same time, the new system continued using a single proprietary trading account that contained all of the option assets. Despite continued use of that pooled account, RenTec told the Subcommittee that the new subaccounts ensured specific assets individually corresponded to and hedged each option separately.351 Both Deutsche Bank and RenTec explained that the new system also “resolved ambiguity” relating to how an individual option could be liquidated in the event of the option breaching its barrier, because with subaccounts, it would be clear what assets to liquidate.35 [THIS IS ODD->>]At the same time, as part of the new system, Deutsche Bank allowed RenTec to “journal” assets between different subaccounts.353 A “journal” in this context is the ability to transfer a stock position from one subaccount to another, using book entries for the two accounts to accomplish the transfer, without the need to sell the position to the market and then immediately buy it back.354 According to both [IMPORTANT] Thomas Kerns and Eamon McCooey, who managed operations for Deutsche Bank’s updated MAPS system at different times, this kind of transfer would have been problematic if it had been conducted through the market, since selling and repurchasing identical securities could have been misinterpreted as “wash sales” or some other type of manipulative trading.3 RenTec completely controlled the journaling process through its authority to determine what assets could be included in a particular option account. According to RenTec, it used journaling for “Portfolio rebalancing due to Option Exercise,” meaning to “reallocate the positions in the sub-account underlying the exercised option to the remaining options based on their relative cash settlement amounts.”356 Peter Brown, co-CEO of RenTec, explained to the Subcommittee that the journaling process was important, because it assisted RenTec with loss protection. 357 He explained that it also made sense to be able to journal from a business perspective because, under the new MAPS structure, Deutsche was charging RenTec an “upfront 20% of the premium as prepaid financing,” incentivizing RenTec to start with high leverage because they were already paying for it.35 RenTec used the journal process frequently to transfer positions between Deutsche Bank subaccounts when a new option was opened or an older option was exercised.359 At the Subcommittee’s request, RenTec provided a listing of journal entries it had made in preparation for the exercise of an option or the initiation of a new option. The list shows that, after 2008, journaling was used to transfer assets at all but one European style option at Deutsche Bank.360 The list also indicates that the journals were used to transfer between 14% and 100% of the assets in a particular option subaccount.361 Of the ten journals RenTec identified for the Subcommittee as undertaken in anticipation of an option exercise, two transferred 100% of the assets in the option that was about to be exercised, and two more transferred 99% of the assets in the option about to be exercised.362 The average value of each of those ten journal entries represented over $800 million in positions, and RenTec used those journals to transfer those positions to other option subaccounts it controlled, before exercising the options that referenced those positions.363 The data indicates that RenTec also used journals at other points in the life of an option contract: many were done just prior to exercise, but a few journals transferred assets more than three months prior to the exercise of the option from which they were journaled.364 In 2011, RenTec conducted a pair of journals after an option had already been exercised but prior to its final valuation.365 Subcommittee interviews of Eamon McCooey, Deutsche Bank (5/2/2014), Thomas Kerns, RenTec (5/6/2014), and Peter Brophy, Deutsche Bank and RenTec (5/13/2014 and 5/19/2014). Hoever, RenTec counsel told the Subcommittee that it was irrelevant whether its “recommendation” to remove a position from a subaccount resulted in a journal or a sale to the market. “There does not need to be, and there is not, any provision in the Deutsche Bank option confirmations relating to Renaissance’s ability to recommend that securities positions be journaled from one sub-account to another. This is because, as previously discussed, each option references the notional portfolio resulting from Renaissance’s recommendations for an individual Deutsche Bank sub-account, and it is irrelevant, from the standpoint of the option, whether Renaissance recommends that a position be removed from the sub- account by means of a journal to another sub-account or by means of a sale into the market.” 8/30/2013 email from RenTec’s counsel to the Subcommittee, “per our discussion,” PSI-RenaissanceTech-20–000001–002, at 002. [VITAL POINT ->] This position appears to be inconsistent, however, with RenTec’s explanation for why it preferred journaling over asset sales when moving assets from one MAPS account to another.
• 31 March 2009 – SEC Examination report for RenTec LLC “ Trading records and other evidence indicate that RenTec used its discretion over the basket option accounts to conduct millions of high-volume trades for years. In response to a Subcommittee inquiry, RenTec estimated that the company conducted from 100,000 to 150,000 trades per day with each banks” – “These large figures appear to be corroborated by an SEC examination report that calculated, for the one-year period from April 1, 2008 to March 31, 2009, that RenTec executed approximately 129 million orders. “Examination Report for: Renaissance Technologies LLC (801–53609),” prepared by the SEC”. While RenTec executives repeatedly told the Subcommittee that the company simply “suggested” or “recommended” trades to the banks for their hedge accounts,289 it is difficult to credit that description of RenTec’s actions given that it had the trading authority and electronic means to execute actual trades through the option accounts at its discretion and without consultation with the banks. Another factor is the sheer volume of trades that were actually executed on a minute-to-minute basis each day; it is difficult to understand how all of those trades were completed if RenTec were merely suggesting rather than executing the trades. It is also difficult to understand how the company offered “suggestions,” since virtually all of the trade orders were initiated electronically, using RenTec’s proprietary algorithms, and were executed immediately using the banks’ trading software and direct market access, typically with no human intervention on either side.
• April 20o9 – Wall Street Journal Date [DATE LOOKS INCORRECT]– In April, the SEC began an examination of Mr. Simons’s fund company, Renaissance Technologies, looking at its books and records, along with the other information that the SEC typically requests as part of such a procedure for funds registered with the agency. The examination is “routine” in nature, a person close to the situation says; there is no evidence that the SEC believes Renaissance has done anything wrong.
• 8 April 2009 – Jim Simon’s letter to Investors – P.S. Renaissance recently updated its Form ADV Part II, as required by the SEC. We do not believe that any of these changes are material. [TD: emphasis, and legiblity, added.]
• April – May 2009 – Barclays PWC discussions around deconsolidating Palomino [ie forced/told to/remediation from SEC review…] – PWC confirmed in writing to Barclays that the restrictions placed on Palomino ensured that Palomino existed only for the benefit of RenTec, citing in particular the restriction on the activities of Palomino resulting from the June 2009 amendments to the Palomino Articles of Association.309 Among other matters, those amendments specified that only RenTec could serve as the trading manager for a Palomino account and that Palomino could hold prime brokerage accounts only through members of the Barclays group
• 19 June 2009 – 6/19/2009 email from Simon Constant to Paolo Mammola of Barclays, “Project COLT – articles amendment,” BARCLAYS-PSI-577747.
• 24 June 2009 – Barclays Memorandum to Price Waterhouse Coopers (PWC) – Palomino Limited – In addition, the COLT options imposed “limits on liquidity, sector exposure, size and leverage in order to substantially reduce the risk that any gap risk loss is greater than the call option premiums.” June 24, 2009, Barclays sent a memorandum to PWC proposing to remove Palomino from the bank’s balance sheet.312 In that memorandum, to support the proposed deconsolidation, Barclays made the following statements regarding RenTec’s control of Palomino, Palomino’s COLT accounts, and the assets in those accounts • “Although BBPLC owns 100% of the ordinary shares of Palomino, RenTec has the power to govern the financial and operations decisions for its benefit due to decisions it makes over Palomino’s activities under the IMA [Investment Management Agreement] ….• Palomino was created solely to enable RenTec … to benefit … from its long- short statistical arbitrage strategy in an efficient manner (we understand that RenTec also obtains an additional tax benefit under the transactions as its profits on the Badger Options will generally be subject to tax at the long term capital gains rate of 15% rather than the ordinary income tax rate of 35%). • The trading activities of Palomino in relation to the PB [Prime Brokerage] Accounts are managed solely by RenTec as the Trading Managers such that RenTec can obtain the majority of the benefits from Palomino’s activities. …• [T]he PB [Prime Brokerage] Accounts are controlled by RenTec.• RenTec is effectively entitled … to 100% of the benefits from Palomino’s trading activates less any prime brokerage fees paid to BCI and BCSL in respect of the PB Accounts. • Conclusion: Following the proposed amendments to the Articles and the entryinto the Side Letter, RenTec controls the major activities of Palomino and is exposed to substantially all significant risks and rewards arising from the activities carried out through the PB Accounts, being the only permitted activities of Palomino.”313. 6/24/2009 memorandum from Barclays to PricewaterhouseCoopers, “Palomino Limited (‘Palomino’),” BARCLAYS-PSI- 139757–166, at 764 . No longer included in Barclays’ financial statements, reducing Barclays’ total assets by more than $4 billion. 302 This accounting approach mirrored the accounting treatment that the bank already provided for standard prime brokerage accounts holding client assets; it also mirrored how Prime Services, the Barclays division that dealt directly with RenTec, already handled the accounting for the majority of its client accounts.303 June 2009, to obtain approval for the proposed deconsolidation from its auditor, PricewaterhouseCoopers (PWC), Barclays implemented several PWC recommendations to clarify that Palomino was controlled by and operated for the benefit of RenTec. First, Barclays amended the Palomino Articles of Association to “restrict the activities of Palomino to those it is currently engaged in under the COLT transaction,”305 including to continue to work with RenTec. Second, Barclays entered into a side letter with RenTec in which its subsidiary, BBPLC, the sole owner of Palomino, “covenant[ed] that it shall not make any amendments or modifications to the Memorandum and Articles of Association of Palomino without … the prior written consent thereto of Renaissance
• 26 June 2009 – 6/26/2009 letter from Mark Silber, RenTec, to Martin Malloy, Barclays, “Palomino Limited,” signed by Mark Silber on behalf of both RenTec and Badger Holdings, RT-PSI-00236651–655. “In addition, Palomino’s owner, BBPLC, entered into the side letter with RenTec, promising not to further amend the Palomino Articles of Association without obtaining RenTec’s prior approval, further demonstrating RenTec’s control over Palomino”
• 2009 [by H1 2009] Barclays deconsolidate Palomino Limited from accounts
• 24 August 2009 – 8/24/2009 email from William Broeksmit to Satish Ramakrishna of DB, “Renaissance Technologies,” DB-PSI 00005713–715, at 714 – Deutsche Bank offered RenTec a leverage ratio of up to 18:1
• 26 August 2009 – 8/25/2009 email from William Broeksmit to Anshu Jain of Deutsche Bank, “RenTech MAPS,” DB-PSI 00006983–084, at 083. The Renaissance MAPS trade is a synthetic, non-recourse PB-inspired facility. We [Deutsche Bank] carry the equity longs and shorts, as directed by Renaissance, on our BS [balance sheet] and pass the performance of [the] portfolio to Renaissance via swap.
• 29 August 2009 – ZeroHedge Article – http://www.zerohedge.com/article/time-revisit-rentecs-allegedly-illegal-dark-pool-limit-order-and-swap-transaction-strategies. – EXTRACT FROM LITIGATION PAPERS

“ITG-POSIT (The Dark Pool angle)

131. In particular, Dr. Volfbeyn was instructed to devise a strategy to defraud investors trading through the Portfolio System for Institutional Trading (“POSIT”). POSIT is an electronic trading system operating by Investment Technology Group (“ITG” ). POSIT collects buy and sell orders from large traders and attempts to match them.

132. On information and belief, POSIT is completely confidential. It does not reveal information about orders to anyone. For its customers, this confidentiality is an essential aspect of the system.

133. Renaissance asked Dr. Volfbeyn to create a computer algorithm to reveal information that POSIT intended to keep confidential [REDACTED]

134. Renaissance intended to, and did, use this trading strategy [the POSIT strategy] to profit [REDACTED]

135. Dr. Volfbeyn believed that [REDACTED] [the POSIT strategy] violated securities laws. He expressed his opinion to his superiors at Renaissance and refused to build the computer algorithm as they requested.

Limit Order Strategy [Stealing Liquidity]

139. Renaissance asked Dr. Volfbeyn to develop a computer algorithm [REDACTED] [the “limit order strategy”]

140. A limit order is an instruction to trade at the best price available, but only if the price is no worse that a “limit price” specified by the trader. Standing limit orders are placed in a file, called a limit-order book. Limit-order books on the New York Stock Exchange and NASDAQ are available to be viewed by anyone.

141. By [REDACTED], Renaissance intended to profit illegally.

142. Dr. Volfbeyn refused to participate in such activities. He explained that his refusal was based on his belief that the proposed transactions violated securities laws [2nd time RenTec allegedly used an illegel strategy]

143. Senior Renaissance personnel, including Executive Vice President Peter Brown and Vice President Mark Silber, attempted to persuade Dr. Volfbeyn to engage in the [REDACTED] limit order strategy, despite his objections. Mark Silber is the compliance officer for Renaissance, responsible for implementing systems to ensure that Renaissance does not violate the securities laws, and for protecting employees who complain about potentially illegal conduct.

144. On information and belief, Renaissance did not implement the [REDACTED] limit order strategy prior to Dr. Volfbeyn’s termination. [What about after?]

Swap Transactions [The Naked Short Scam]

145. At all times relevant to this action, Rule 3350 of the NASD, prohibited NASD members, with certain exceptions from effecting short sales in any Nasdaq security at or below the current national best (inside) bid when the current national best (inside) bid is below the preceding national best (inside) bid in the security.

146. At all times relevant to this action, Rule 10a-1 under the Securities Exchange Act of 1934 provided that, subject to certain exceptions, an exchange-listed security could only be sold short at a price above the immediately preceding reported price or at the last sale price if it is higher than the last different reported price.

147. During the period when Dr. Volfbeyn and Dr. Belopolsky were employed at Renaissance, plaintiff engaged in a massive scam [REDACTED] [the “swap transaction strategy”]

148. [REDACTED]

149. [REDACTED]

150. Renaissance conducted [REDACTED] in violation of Rule 3350 and Rule 10a-1. Renaissance also intentionally [REDACTED] in violation of SEC and NASD rules. [REDACTED] Renaissance profited from the strategy [REDACTED].

151. Researchers at Renaissance expressed their concern to Executive Vice President Peter Brown and other officials of Renaissance about the legality of these swap transactions, including concerns that the transactions violated the tax laws and securities laws. Renaissance failed to halt the transactions. On information and belief, the swap transactions are continuing and generate substantial profits for Renaissance.”

• 8 October 2009 – Deutsche Bank RenTec Investment Advisory Agreement/Barrier Option Transaction no.941–50310 - “to ensure that the investment advisor had complete control over the account, the Investment Advisory Agreement between Deutsche Bank and RenTec specified that, if an order placed by RenTec was not executed, or was subsequently undone without orders from RenTec, the assets that were supposed to have been purchased would still be considered to be part of the reference account for purposes of calculating the option’s gain or loss. See, e.g., 10/8/2009 “Barrier Option Transaction No. 941–50310 Pursuant to the 1992 ISDA Master Agreement as supplemented in December 15, 2008,” DB-PSI 001130213–241 at 222 (defining the basket as consisting of “positions that (i) actually result from transactions specified by the Investment Advisor … or (ii) are Designated Positions (as such term is defined in the Master Investment Advisory Agreement …)”; 12/15/2008 “Master Investment Advisory Agreement: Execution Copy,” signed by Deutsche Bank and RenTec, DB-PSI 00000001–047, at 002 (defining a designated position as any position “rejected,” “unwound,” or “liquidated” by the Client “without the direction of the Advisor”).
• Late 2009 – James Simons steps down [NOTE READING BETWEEN LINES THIS IS LINKED TO SEC FINDINGS & PROB INVESTOR DISQUIET]
• During 2010/2011 – James Simon’s son link donates USD23m to Sea Change Foundation from
• 3 January 2010 – Barclays letter to SEC regarding COLT Transactions – See, e.g., 1/5/2010 letter from Barclays to SEC, “Follow-up to meeting regarding Colt Transaction Summary,” BARCLAYS-PSI-287767–770, at 767, 769 (explaining to the SEC that it offered accounts in which “[c]lients enter orders electronically via … proprietary trading engines [and] [t]he desk then routes those orders to exchanges, Alternating Trading Systems (ATSs) and Electronic Communications Networks (ECNS),” and that the RenTec “Flip Account” was “RenTec’s execution account that ‘flips’ executions … for clearing purposes,” while Palomino’s account acted as “RenTec’s clearing account … to facilitate settlement”). 241 Subcommittee interview of Peter Brown, RenTec (6/3/2014). See also 1/5/2010 letter from Barclays to SEC, “Follow-up to meeting regarding Colt Transaction Summary,” BARCLAYS-PSI-287767–770, at 767 (explaining to the SEC that some of its accounts, including RenTec and Palomino accounts, offered “sub-millisecond internal latency for execution. NOTE – According to RenTec, its trading algorithms were dynamic and had to be updated and adjusted on a regular basis by its programmers. RenTec explained that the algorithm was frequently modified manually by programmers through what was described as an “objective function.” For example, the objective function could be modified to direct trades to particular options to reduce or increase its portfolio size, or to reduce or increase exposure at a particular bank. Subcommittee Interview of Peter Brown, RenTec (6/3/2014) RenTec purchased multiple COLT options, some of which were in effect at the same time. In that case, the assets referenced by each option were not separately managed or accounted for, but pooled together in a single trading account of which each option represented a proportional share.239 As previously noted, the algorithmic strategy employed by RenTec’s Medallion Funds was more effective with a high trading volume. RenTec accordingly conducted tens of thousands of trades per day using the prime brokerage accounts designated in the basket option contracts. To execute the trades, Barclays gave RenTec direct market access through its proprietary trading software, enabling RenTec to place trade orders instantly into the market and receive immediate executions.240 “The trade is done within milliseconds ….”241 In almost all instances, the trades were placed and executed by computer from RenTec’s facilities, using its algorithms to initiate and execute the trades through the bank’s proprietary trading software. The trades were typically executed with no human intervention on either side, except when RenTec personnel adjusted the algorithm parameters.242 The executed positions were held in the designated option accounts in the name of Palomino and were immediately reported to Barclays.243 All positions were reconciled daily for both Barclays and RenTec
• 5 January 2010 – Barclays letter to SEC regarding COLT Transactions – See, e.g., 1/5/2010 letter from Barclays to SEC, “Follow-up to meeting regarding Colt Transaction Summary,” BARCLAYS-PSI-287767–770, at 767, 769 (explaining to the SEC that it offered accounts in which “[c]lients enter orders electronically via … proprietary trading engines [and] [t]he desk then routes those orders to exchanges, Alternating Trading Systems (ATSs) and Electronic Communications Networks (ECNS),” and that the RenTec “Flip Account” was “RenTec’s execution account that ‘flips’ executions … for clearing purposes,” while Palomino’s account acted as “RenTec’s clearing account … to facilitate settlement”). 241 Subcommittee interview of Peter Brown, RenTec (6/3/2014). See also 1/5/2010 letter from Barclays to SEC, “Follow-up to meeting regarding Colt Transaction Summary,” BARCLAYS-PSI-287767–770, at 767 (explaining to the SEC that some of its accounts, including RenTec and Palomino accounts, offered “sub-millisecond internal latency for execution:
• 6 January 2010 – 1/6/2010 email from Axel Niemann to Giovanni Favretti of Deutsche Bank, “MAPS,” DB-PSI-00006875. In connection with evaluating the GLAM, Deutsche Bank personnel noted that there was a “30d [day] right of termination for DB [Deutsche Bank] embedded in all these contracts” that did not require cause for termination.478 That provision would have allowed Deutsche Bank to terminate the contracts, using a method that would have required it to terminate one account at a time with a gap of twenty exchange business days between each account
• 19 April 2010 – “Randal A. Nardone, co-founder and COO of Fortress Investment Group, and his wife, Melani, sold their apartment at the Heritage at Trump Place at 240 Riverside Boulevard for $9 million to Sylvain Mirochnikoff and his wife, […] Rebekah Mercer. The “sprawling” open-floor-plan, river-view four-bedroom was listed by Corcoran’s David Chang. Mr. Mirochnikoff, an exotic equity derivatives trader at Morgan Stanley, and Ms. Mercer currently own the apartment above the Nardones’ double-unit condo, which would suggest the couple plan to combine the two floors. Filed: 4.19.10" NOTE. – they go on to combine 6 apartments… Rebekah and Mirochnikoff’s $28 million apartment in the 41-story Heritage at Trump Place on the Upper West Side (they bought six apartments and combined them, according to public records) http://www.townandcountrymag.com/society/news/a9204/rebekah-mercer-donald-trump-transition/
• 6 May 2010 – Dow Jones Flash Crash – So many shares were traded that day that the online trading section of the New York Stock Exchange temporarily froze and between 2.30pm and 3pm the Dow Jones lost and then regained nearly $1 trillion.
• 19 May 2010 – Email from Edward Sherwood to Brett Beldner of Barclays, “COLT XIX – Draft SCM Approvals Notification,” BARCLAYS-PSI-010082. “Senior financing” refers to very secure financing, senior debt that has a position of priority relative to other lenders in the event of bankruptcy. See, e.g., 12 C.F.R. § 327 app. C. (“Senior debt includes any portion of total debt that has a priority claim on any of the borrower’s assets. A priority claim is a claim that entitles the holder to priority of payment over other debt holders in bankruptcy.”) “The options reference the value of these PB [Prime Brokerage] accounts, which is equivalent to them referencing the assets directly, and therefore there is no leakage between the value of the assets … and the value of the options. Thus, the net effect is that Barclays is extending senior financing to RenTec
• 2010 – Renaissance Technologies terminated its 401(k) retirement plan in 2010 – Employees account balances were put into Individual Retirement Arrangements.[8] Contributions could be made to a standard Individual Retirement Arrangements and then converted to a Roth IRA regardless of income
• 11 October 2010 – Alexey Kononenko buys 44th floor of Bloomberg Tower: “A condo at One Beacon Court, the tower at 151 East 58th Street known as the Bloomberg building, has been sold for $15.25 million, according to city records posted today. The buyer is Alexey Kononenko, a management consultant at Strategy Partners. The seller, listed on the deed only as Atlantic Properties NY, LLC, paid $9.5 million for unit 44A in June, 2006. TRD […] One Beacon Court, famed for its flips, has scored its most soaring turn yet. A stunning 44th-floor place has sold for $15 million – more than the most recent listing price of $14.75 million. The seller is a one-time Philip Morris senior vice president Marc S. Goldberg, who The Observer imagines won’t get too dizzy over the extra 250K for a 3,000-square-foot spot and sky-high views”
• 12 November 2010 – IRS Basket Option Generic Legal Advice Memo – November 12, 2010, the IRS issued Generic Legal Advice Memorandum (GLAM) No. AM2010–005, determining that an option used to purchase a basket of securities that is essentially managed by the taxpayer holding the option should not be treated as an option for tax purposes.89 Instead, the taxpayer should be treated as owning the securities underlying the alleged option and pay the taxes owed on any capital gains.
• 12 November 2010 – Barclays concludes COLT structure is non-compliant tax evasion by RenTec – 11/12/2010 email from Graham Wade to Nizam Sidiq and Jonathan Zenios of Barclays, “Privileged Colt,” BARCLAYS-PSI-748506. This [the GLAM] is a detailed write up of Colt concluding it doesn’t work. We can discuss on MDs [managing directors’] call but I intend to reach out to RenTec and Ed Cohen this morning to make sure they are aware. We will also confirm it does not impact Barclays. The only issue for Barclays I could see is some deemed wht [withholding] agent issue as the memo concludes that RenTec are the legal owner of the stocks. To me this would signal that IRS is inevitably going to litigate Colt. – > Subcommittee Levin Finding “At that point, Barclays recognized that the IRS had concluded that its basket option structure “doesn’t work.” Yet, that realization did not dissuade Barclays from continuing with the transaction. Over the next two years, Barclays entered into another nine basket option transactions with RenTec”
• 12 November 2010 – After release of the IRS GLAM in November 2010, Deutsche Bank chose to suspend writing any new options for the rest of that year and all of 2011, while it re-evaluated the MAPS structure
• 14 November 2010 – Deutsche Bank enters into new MAPS transactions with RenTec (in breach of IRS GLAM) Source… “However, when the GLAM came out, Deutsche Bank had coincidentally nearly finished issuing another option to RenTec and chose to finish that process, completing the option just two days after the GLAM was released.”
• 9 December 2010 – James Simons speech to MIT: “On December 9, 2010, MIT and the Dean of Science welcomed Dr. James “Jim” Simons back to campus to give the School of Science Dean’s Colloquium entitled, “Mathematics, Common Sense, and Good Luck: My Life and Careers.” Simons talked about his careers first as a mathematician, then as founder and CEO of a successful hedge fund, and now as a philanthropist. Simons told the packed audience in 10–250 how he was destined for MIT, having known he wanted to be a mathematician since he was a boy. One very late night he was out with friends at the now defunct Brookline deli Jack and Marion’s, and he saw MIT mathematicians Warren Ambrose with Is Singer sitting at a table drinking coffee, smoking cigarettes, and doing math on paper napkins. Simons thought that was the “coolest thing” and determined to pursue a career in math. […] It’s an open atmosphere,” Simons said in a speech at MIT in 2010. “We make sure everyone knows what everyone else is doing, the sooner the better. That’s what stimulates people.” https://science.mit.edu/getinvolved/science/spring-2011/mathematics-common-sense-and-good-luck-my-life-and-careers”
• 21 December 2010 – 12/21/2010 letter from Preet Bharara, United States Attorney for the Southern District of New York, to Deutsche Bank’s counsel , “Deutsche Bank AG – Non-Prosecution Agreement,” at 2, http://lib.law.virginia.edu/Garrett/prosecution_ agreements/sites/default/files/pdf/deutschebank.pdf
• 2010 – Robert Mercer donates USD45m to GOP campaigns and USD50m to Non profits through to late 2016
• 3 February 2011 – Deutsche Bank – Independent Expert Meeting – the bank met with the independent expert, Bart Schwartz, who had been hired by the bank to oversee the bank’s compliance with the NPA. The Subcommittee has received conflicting accounts about whether Deutsche Bank informed the independent examiner, as required by the NPA, about its involvement with the MAPS options. According to Mr. Schwartz, neither he nor anyone on his team recalled Deutsche Bank ever informing them about the MAPS transactions, in 2011 or later.
• May 2011 – 5/2011 email exchange among Marty Malloy, John Feraca, Lansford Dyer, and others of Barclays, “Palomino deconsolidates from Barclays Group,” BARCLAYS-PSI-036091–102 “Barclays removed Palomino from its balance sheet for accounting purposes in 2009, as part of a larger series of changes to its overall corporate structure.301 Its action meant that the accounts and assets held in Palomino’s name were no longer considered part of Barclays”
• 26 October 2011 – 10/26/2011 email from Mark Meachen to Anthony Tuths of Deutsche Bank, “Rentec [I],”DB-PSI 00019248–250, at 249 “GLAM is not of precedential value [and] merely represents the current view of the IRS chief counsel office of a particular set of facts. 10/26/2011 email from Mark Meachen to Anthony Tuths of Deutsche Bank, “Rentec [I],”DB-PSI 00019248–250, at 249.”
• 18 July 2011 – Barclays sells ExpoBank for USD75m (10x less than purchase price) – Sold to Igor Kim – Local Russian Banker: “When Barclays, which refused to comment, announced the Expo deal, it had not expected the acquisition to start boosting its overall earnings until 2011. Focused on Moscow, St Petersburg and other parts of western Russia, Expobank was owned by Petropavlovsk Finance until Barclays stepped in. The acquisition was led by Frits Seegers, who was head of global and retail banking for Barclays but has since left the bank. At the time, Seegers had described the bank as “well run” and a local expert, Nikolai Tsekhomsky, former VTB Group finance director, was brought in to speed up growth in the business, which employs about 1,500 people.”
• 27 October 2011 – Deutsche Bank “Project Dawn” “ in October 2011, Deutsche Bank reviewed a product developed under what was called Project Dawn, involving the writing of call options to Mosel, a Delaware partnership in which RenTec served as the general partner.481 Under the proposal, each Project Dawn call option would be an outperformance option which, at expiration, would result in payment to the option holder of the difference in the performance of RenTec’s strategy and the performance of the S&P 500.482 Each option would be a European style option with a 13-month term.483 These outperformance options were intended to isolate the portion of RenTec’s trading strategy that performed above the S&P 500 and provide a payoff “attributable to [that] portion only of the Strategy.””
• [WHEN] 2012…after a Federal Reserve Bank examination identified concerns with the MAPS product in 2012…
• [WHEN] 2012 … Deutsche Bank, at the insistence of the Federal Reserve, brought the product to the attention of the U.S. Attorney for the Southern District of New York in connection with the NPA – PROBABLY 2 AUGUST 2012 MEETING NOTE BELOW…
• 2 August 2o12 – Officials of the Federal Reserve Bank of New York reviewing the MAPS structure questioned Deutsche Bank about whether the bank had disclosed MAPS to Bart Schwartz’s team. Deutsche Bank advised the examiners that it had informed Mr. Schwartz’s team that Deutsche Bank had on its books a transaction like the one reported in the GLAM, but noted that the conversation was “very short.“ 8/2/2012 meetings notes, “MAPS Meetings Highlights,” prepared by the Federal Reserve Bank of New York, FRBNY to PSI (MAPs) 000238 [Sealed Exhibit]. [NOTE BART SCHWARTZ DISAGREED THAT THE MATTER WAS DISCLOSED TO HIS TEAM]
• 30 March 2012 – Donald Trump starts tweeting about Autism “Despite no credible scientific evidence to support Trump’s views the President has tweeted more than 20 times linking multiple or combined vaccines with autism since 2012.”
• 13 April 2012 – 4/13/2012 “Protest of 60 Day Letters by Renaissance Technologies LLC et al.,” RT-PSI-00000001–402 [Sealed Exhibit].
• July 2012 – Barclays commences Salz review (covers RenTec COLT product)
• Aug 2012 – Deutsche Bank meets with Preet Bharara – NY Attorney – “According to Deutsche Bank’s counsel, in August 2012, Deutsche Bank contacted the U.S. Attorney’s Office and then had followup conversations and meetings with the office in September and December 2012 and February 2013.474"
• 3 October 2012 – the SCM Group sent a memo to Barclays’ Tax Risk Committee, informing it of the Group’s decision to approve the new COLT transaction. 10/3/2012 memorandum from Graham Wade to SCM, “COLT XXVII,” BARCLAYS-PSI-016946–947.
• 4 October 2012 – Gerard LaRocca, Barclays CAO, also sent an email alerting the Chair of Barclays’ CIB Reputational Risk Committee to the COLT situation: “The SCM US Approvals Committee recently approved an option transaction in which US tax reputation risk is an issue – 1 10/4/2012 email from Gerard LaRocca to Larry Wiesene of Barclays, “COLT SCM Transaction/Important,” BARCLAYS-PSI-748590.
• 9 October 2012 – Barclays enters new COLT option with RenTec
• 12 October 2012 – October 12, 2012, SCM sent a second memo to the Barclays Tax Risk Committee about the COLT transaction, even though the option had already been issued
• November 2012 – 11/2012 memorandum from Maxim Kulikov and Rama Subramaniam to Barclays SCM US Approvals Committee, “Project COLT XXVIII (Renaissance Technologies) – Approvals Notification,” BARCLAYS-PSI-017091–093, at 091. next month, in November 2012, the SCM Approvals Committee met to discuss RenTec’s request to purchase yet another COLT option.449 A memorandum summarizing the meeting again referred to the IRS investigation into the COLT product: “In AM 2010–005, the IRS concluded the call option does not function as an option and should not be treated as one for US tax purposes.” Nevertheless, the memorandum again advocated approving the new option. It noted that many Barclays committees had already expressed approval of the product: “SCM has notified and received approval from the following in relation to proceeding with the proposed transaction: Tax, Finance, Credit Risk, Market Risk, Regulatory, Legal, Compliance, and Operations.”450
• 12 November 2012 – Alexander Nix becomes CEO of Cambridge Analytica
• 23 November 2012 -Barclays issues 2 New COLT option to RenTec – 1 11/23/2012 email from Noor Islam to Eugene Kim of Barclays, “Colt – Market Risk/Credit Risk,” BARCLAYS- PSI-293251–254, at 251. 11/23/2012 email from James Saxton to Marty Malloy of Barclays, “Palomino options,” BARCLAYS-PSI- 322103
• 12 December 2012 – Further Meeting Deutsche Bank and District Attorney Preet Bahara
• 31 December 2012 – Confidential Private Placement Memorandum, prepared by RenTec, “Renaissance Institutional Diversified Alpha Fund SICAV P.L.C.,” RT-PSI- 00387786–921, at 791, 793 [Sealed Exhibit – The RIDA fund was started in 2012, with the objective to maximize long-term return while attempting to meet a standard deviation selected by the company. The minimum initial investment in RIDA was $5 million. 12/31
• [WHEN] 2012 – Barclays stops offering COLT options – Palomino Limited
• [WHEN] 2012 – Renaissance Technologies: MAPS Restructuring Highlights,” prepared by Deutsche Bank, RT-PSI-00068592–599 [DATE ???]
• [WHEN] 2012 – Deutsche Bank re-starts MAPS options “ Deutsche Bank suspended issuing new MAPS basket options, although it continued to administer multiple option accounts already trading assets. In 2012, Deutsche Bank began offering them again, but only with options whose terms lasted less than one year and contractually required all profits to be reported as short-term capital gains” / “in 2012, Deutsche Bank resumed issuing MAPS options, but with a new requirement that the option term be less than 12 months and the option agreement include a provision requiring the option buyer to treat the option proceeds as short-term capital gains. e.g., undated letter from Deutsche Bank to Mosel Equities LP, “Barrier Option Transaction – Cash Settled- DBSI Reference No. 941–50340,” DB-PSI 00047768.”
• [WHEN] 2012 Renaissance was granted a special exemption by the United States Labor Department allowing employees to invest their retirement money in Medallion – arguing that Medallion had consistently outperformed their old 401(k) plan.
• [WHEN] 2012 – According to information provided by RenTec to the Subcommittee, the IRS notified the hedge fund in 2012, that the IRS had reviewed some of its basket option trading activity and intended to disallow long-term capital gains treatment of basket option profits from trades lasting less than 12 months. The IRS also proposed an assessment of additional taxes for certain tax years. RenTec submitted a letter in opposition.
• February 2013 – Further NY DA meeting – Deutsche Bank with New York District Attorney Preet Brahara
• February 2013 - Barclays concludes Salz review – Salz Review – Project Transform Barclays terminated the SCM group in February 2013.149 Barclay’s CEO Antony Jenkins’ speech to the news media at the time explained “[t]here are some areas [at SCM] that relied on sophisticated and complex structures, where transactions were carried out with the primary objective of accessing the tax benefits. Although this was legal, going forward such activity is incompatible with our purpose. We will not engage in it again.
• 26 February 2013 – 2/26/2013 Power Point Presentation, “Renaissance Technologies LLC [WHO Prepared]
• 25 March 2013 – “Following the conclusion of Barclays’ strategic review (TRANSFORM), the Tax Risk Committee agreed that Renaissance be permitted to enter the New COLT Transaction with the maturity of the options no greater than 11 months. US individual investors of Renaissance would no longer claim the Rate Differential Benefit.”458"
• 23 April 2013 – Syrian Electronic Army tweet – Breaking: Two Explosions in the White House and Barack Obama is injured.” This was not true – the AP account had been hacked by a shady group of technology nerds calling themselves The Syrian Electronic Army http://www.telegraph.co.uk/finance/10188335/Quants-the-maths-geniuses-running-Wall-Street.html
• 8 October 2013 – Subcommittee briefing by Bart Schwartz, independent expert for Deutsche Bank (10/8/2013).
• December 2013 – 19 12/2013 “Barclays Powerpoint,” prepared by Barclays, BARCLAYS-PSI-748589. See also 7/22/2014 “Post- GLAM Basket Option Contracts
• December 2013 – Barclays revises Basket options for COLT – In 2013, Barclays revised its basket option contract so that it, too, offered only basket options with terms that lasted less than one year and could not be used to claim long-term capital gains. In December 2013, a newly established Barclays Transaction Review Committee met to discuss the revised COLT structure.456 In that meeting, the Barclays Transaction Review Committee reviewed the proposed COLT transaction, along with a document entitled, “Background and Commercial Drivers.”457 That document described the new features of the COLT transaction as follows: “On 25 March 2013, following the conclusion of Barclays’ strategic review (TRANSFORM), the Tax Risk Committee agreed that Renaissance be permitted to enter the New COLT Transaction with the maturity of the options no greater than 11 months. US individual investors of Renaissance would no longer claim the Rate Differential Benefit.”458 In late 2013, Barclays offered the new, short-duration COLT option to RenTec. 459 RenTec purchased one of the new COLT options in early 2014. 460"
• [WHEN 2013] RenTec IRA plans had 259 participants who $86.6 million contribution grew to $153 million that year without fees or annual taxes.
• 31 December 2013 – At the end of 2013, RIEF had $7.9 billion of assets under management; 50% of those assets were from RenTec employees
• 31 December 2013 – At the end of 2013, RIFF had $645 million of assets under management; 75% of those assets were from RenTec employees
• 31 December 2013 - At the end of 2013, the RIDA fund had $4.2 billion in assets under management. 4/1/2014 Between 50% and 75% of those assets under management were from RenTec employees.
• 26 January 2014 – William Broeksmit of Deutsche Bank commits suicide – his emails were included in the upcoming Levin Committee investigation. https://www.nytimes.com/2016/12/30/business/dealbook/deutsche-bank-flew-and-fell-some-paid-a-high-price.html
• 2014 – RenTec set up a new 401(k) plan and in November 2014 the Labor Department allowed that plan to be invested in Medallion as well
• 31 March 2014 – RenTec combined holdings exceeded $41 billion [Query Leverage]
• 1 May 2014 – Levin committee – Martin Malloy, Barclays (5/1/2014)
• 2 May 2014 – Levin committee – Martin Malloy, Barclays (5/1/2014)
• 20 May 2014 – Levin committee – Eamon McCooey, Deutsche Bank (5/2/2014)
• 28 May 2014 – Subcommittee interview of James Rowen, RenTec
• 28 May 2014 – Jonathan Mayers Evidence to Carl Levin committee
• 3 June 2014 – Peter Brown CEO Evidence to Carl Levin committee “According to RenTec Co-CEO Peter Brown, the option was a “delta 1” option, meaning that its value perfectly tracked the value of the underlying assets. Subcommittee interview of Peter Brown, RenTec (6/3/2014). Barclays risk management personnel also confirmed that this was a “delta 1 option” and explained to the Subcommittee that basket options did not pose either “market risk” or “credit risk” for the bank. Subcommittee interview of Lansford Dyer, Barclays (4/3/2014). In addition, Barclays represented to its regulator, the Financial Services Authority, that the COLT structure “does not give rise to market risk within Palomino Limited.”
• 10 June 2014 Mark Silber Evidence to Carl Levin committee
• 20 June 2014 – RenTec General Counsel – Evidence to Carl Levin committee-

1. “Renaissance Medallion Fund. Of the four RenTec funds, only the Medallion Fund made use of the basket option structure. The Medallion Fund is the name given to a collection of related master and feeder funds, as well as a number of subsidiaries, established by RenTec to implement a proprietary algorithmic investment strategy. According to RenTec, “master and feeder funds” refer to two tiers of related entities, in which the master funds invest directly in a financial product and then pass the earnings to feeder funds which, in turn, distribute them to individual investors
2. The Medallion Fund consists of five domestic and two foreign feeder funds, all of which are controlled by RenTec in its role as general partner of each fund.166 These separate feeder funds were used to accommodate different types of investors: RenTec employees, non-RenTec employees, accredited and non-accredited investors, and foreign investors who do not pay taxes as U.S. persons, among other types.167 Outside of the basket option structures, the Medallion feeder funds invest through six subsidiaries, structured to gain access to certain markets.168 The Medallion feeder funds hold ownership interests as limited partners in five Medallion master funds which RenTec controls as either the general partner or designated investment advisor.169 One of those master funds, Medallion Holdings Ltd., is the holding company for nine trading subsidiaries.170 Those subsidiaries “were formed to trade in various markets around the world.”171 Three of the subsidiaries are no longer active.172. The five domestic feeder funds were established in Delaware: Medallion Associates LP, Medallion Fund LP, Medallion USA LP, Medallion RF LP, and Medallion RMP Fund LP. The two foreign feeder funds, Medallion International LTD and Medallion Capital Investment LTD, were incorporated in Bermuda. See 5/21/2008 email from Thomas Kerns to Mark Silber of RenTec, “Legal Entity Org Chart Powerpoint,” RT-PSI-00363679–717, at 681. See also undated spreadsheet, “Confidential Treatment Requested by Renaissance Technologies LLC,” prepared by RenTec, RT-PSI-00390362 [Sealed Exhibit]. 167 See 5/21/2008 email from Thomas Kerns to Mark Silber of RenTec, “Legal Entity Org Chart Powerpoint,” RT- PSI-00363679–717, at 682. 168 The six Medallion feeder fund subsidiaries are [Redacted] Trading Ltd (Bermuda), [Redacted] Trading S.A. (Uruguay), [Redacted] Holdings LLC (Delaware), [Redacted] Trading Ltd (Bermuda), [Redacted] Trading LLC (Delaware), and [Redacted] LLC (Delaware). See id. at 691. 169 The five Medallion master funds are Mosel Equities LP (Delaware), Badger Holdings LP (Delaware), Medallion Holdings LTD (Bermuda), Medallion Trading (Bermuda), and Nova Fund LP (Delaware). See id. at 694. 170 The nine trading subsidiaries include seven formed in Bermuda: Baden Equities Ltd, Bass Equities Ltd, Franconia Equities Ltd., [Redacted] Equities Ltd., [Redacted] Trading Ltd., St. Veran Equities Ltd., and [Redacted] Equities Ltd. One trading subsidiary, [Redacted] Trading LLC, was formed in Delaware. The final trading subsidiary, [Redacted] Investment Ltd., was formed in Mauritius. See id. at 696. 171 Id. at 697. 172 The three subsidiaries no longer active are Bass Equities Ltd., [Redacted] Trading Ltd., and [Redacted] Equities Ltd. Id.

• July 2014 “Five members of the RenTec’s Executive Committee are James Simons, Mark Silber, Henry Laufer, Peter Brown, and Robert Mercer hold 70% of RTHC, total holding 85.7% held in RTC remainder. 14.3% held by RTCII
• July 2014 “RenTec currently controls four funds. They are the Medallion Fund (Medallion), Renaissance Institutional Equities Fund (RIEF), Renaissance Institutional Futures Fund (RIFF), and Renaissance Institutional Diversified Alpha Funds (RIDA).”
• 16 July 2014 Subcommittee briefing by Bart Schwartz, independent expert for Deutsche Bank (7/16/2014).
• July 2014 Carl Levin IRS enquiry Report

1. “the Government Accountability Office has determined that 99% of the tax returns filed by large partnerships with assets exceeding $100 million have not been audited by the IRS. This extremely low auditing rate may embolden large partnerships such as hedge funds to employ abusive tax structures.”
2. “a derivative may provide an opportunity for a purchaser to avoid the ownership reporting requirements under the securities laws. Schedule 13D requires any person with a beneficial ownership interest of more than 5% of any class of publicly traded securities in a company to report that interest in a filing to the SEC. The basket option contracts between RenTec, Deutsche Bank, and Barclays did not set up an arrangement that would produce an identifiable set of referenced assets. The contracts stated that the determinant of what the banks would owe RenTec upon exercise of the option would be the performance of a designated option account. The account, which was to be managed and controlled by RenTec, was permitted to include a broad array of assets, whose selection was at the discretion of RenTec, subject only to some basic guidelines to reduce trading risk.341 RenTec then used the basket option accounts to implement a proprietary investment strategy that employed as many as 300,000 securities trades at two banks per day, constantly changing the mix of assets in the option accounts. RenTec personnel were continually monitoring and adjusting the factors used by the complex computer model that RenTec developed and employed to execute its strategy. The volume of trades that RenTec conducted in the account was so large and the length of time that the assets were held was generally so short that the entire composition of tens of thousands of assets in the option accounts changed several times a year. In essence, the banks allowed RenTec to write an option on RenTec’s own daily trading activity, whatever RenTec might decide that trading activity would be. The contracts did not further identify the referenced assets”
3. “One striking feature of how they operated is that neither the hedge funds nor the banks traded the option assets on an individualized, per option basis; instead, they pooled the assets from multiple options before trading them, transferred assets among different option accounts, and used a single trading strategy for all of them. By ignoring the option formalities and treating the assets as part of a single, large investment pool, the hedge funds and banks showed the option format was a pretext for enabling the hedge funds to conduct a complex trading strategy while claiming the strategy produced lower taxes and higher leverage than would otherwise be available through a normal prime brokerage account.”

• Post July 2014- Ren Tech’s Deutsche MAPS/Barclays COLT options review by the IRS’ internal Office of Appeals.
• 13 April 2015 – Twitter changes data licencing terms to full hose
• May 2015 – Articles on Amazon Web Services AI Hedge Funds
• October 2015 – RenTek has USD65bn AUM (mostly employee owned)- [Query leverage]
• 16 February 2016 – Zacks Investment Research raised shares of VimpelCom from a “sell” rating to a “hold” rating
• Q1 2016 – Renaissance Technologies LLC boosted its stake in VimpelCom Ltd (NASDAQ:VIP) by 438.1% during the first quarter, Holdings Channel reports. The firm owned 1,422,522 shares of the company’s stock after buying an additional 1,158,182 shares during the period. Renaissance Technologies LLC’s holdings in VimpelCom were worth $6,060,000 at the end of the most recent reporting period. The firm owned 1,422,522 shares of the company’s stock after buying an additional 1,158,182 shares during the period
• 2016 – James Simons donated USD26,277,450 politically (DEM)
• 2016 – Robert Mercer donated USD25,059,300 politically (GOP)
• 3 December 2016 – Mercer celebration costume party for PEOTUS Trump Long Island – http://www.townandcountrymag.com/society/news/a9204/rebekah-mercer-donald-trump-transition/

How Lehman Bros (Now Barclays) COLT structure worked…

To accommodate RenTec, Barclays created the COLT structure, which used a separate Barclays entity, Palomino Ltd., and a two-tiered options structure to execute trades for RenTec. As detailed below, the options involved three Barclays entities, Palomino, BBPLC, and the New York branch of Barclays PLC, as well as a RenTec subsidiary, Bass Equities Ltd. Later, Bass was replaced with another RenTec entity called Badger Holding LP.

The seller of the option used part of the premium to fund the initial purchase of the referenced assets that were held in the basket portfolio. The remainder of the premium – generally 20% – 25% of the total premium – was taken by the option seller as a financing fee for the leverage that it was providing to the hedge fund. From 2002 to 2012, Barclays provided COLT basket options solely to RenTec.

Under the COLT structure, Barclays created a Cayman Island Special Purpose Entity (SPE) named Palomino Ltd.227 Palomino was a shell corporation controlled by Barclays; it had no full time employees or physical offices of its own.228 Its directors and officers were Barclays employees who worked for other Barclays entities.229 Each basket option account was opened in the name of Palomino, which was the nominal owner of all of the account assets. were opened as prime brokerage accounts with Barclays Capital Inc. in the United States and by Barclays Capital Securities Limited in the United Kingdom.230

In connection with each COLT option, Palomino hired RenTec to be its investment advisor under an Investment Management Agreement that gave RenTec the exclusive right and the “full” discretion without the need to consult with Barclays to execute transactions directly into the Palomino prime brokerage accounts in the United States and United Kingdom, subject to general guidelines specified in the agreement.231 While. RenTec representatives told the Subcommittee that they merely recommended or suggested trades to Palomino, 232 given the company’s shell status, the extraordinary number of daily trade executions, and the provisions in the option contracts, the facts indicate that all transactions in the accounts were actually fully controlled by RenTec.

After the accounts were opened and the Investment Management Agreement signed, Palomino sold options on the performance of the accounts to the U.S. branch of Barclays Bank PLC, which in turn sold identical options to Badger Holding LP (Badger), a shell entity set up in 2004 and fully controlled by RenTec.233 Like Palomino, Badger had no employees or physical offices of its own. Prior to Badger, RenTec used a company called Bass Equities Ltd. (Bass), which was originally incorporated in Bermuda.234 Badger was later incorporated in the United States.235 Badger served as the official option holder for the COLT options on behalf of RenTec.236

The COLT options were generally established with three-year terms, meaning that the option holder could exercise the option at any time prior to the maturity date which was three years after the option was established.237 RenTec representatives told the Subcommittee that one of the benefits of the option structure was that it gave the hedge fund access to long-term financing.238 In many of the COLT options reviewed by the Subcommittee, however, the option holder – RenTec – exercised the option shortly after 12 months.