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Bitter Hedge Fund Divorce Battles For Custody of the Algos

A long-running divorce between two hedge fund giants isn't over who gets the mansion or the yacht - but who gets to keep the trading algorithms.

Keep the yacht and the big house by the sea, but those algos are mine!

The divorce between Ikos Partners founders Martin Coward and Elena Ambrosiadou has everything: A good-looking couple, tons of smarts, big money, accusations of theft, spying, a Brazilian beauty and a harassed nanny. Oh, and the world's largest private yacht named The Maltese Falcon.

But none of it matters because Coward wants the trading algorithms that sent Ambrosiadou to the top of the hedge fund stratosphere. Now it's up to a London High Court to see who goes home with the formulas.

[Why Wall Street is hungry for quants, even as it shrinks.]

Here’s the dirt:

The couple met in Cambridge at the late 1970s. He studied higher maths that lead to his quant career at Goldman Sachs and she studied chemical engineering that lead to a high profile job at BP before starting her hedge fund.

In 1992, Ambrosiadou started her hedge fund Ikos Partners (Greek for "home") at the age of 33 with $600,000. Soon the couple work together on the fund: She ran the money as he churned out the trading algorithms.

The couple and their employees work on a trio of trading algorithms nicknamed Fox, Wendy and Badger. By 1992, Coward owned a reported 10 percent of Ikos Partners and Ambrosiadou owned the rest. At its peak, the fund had $3.5 billion of funds under management.

But things were not well in paradise. The blonde and striking Ambrosiadou steps into the spotlight after she pays herself $27 million in 2005 and the press hails her as the "Highest Paid Woman of Britain." The couple split in 2004.

A pair of employees - twins Julian and Lucien Gover - sued Ikos for 26 million euros for unpaid equity and Coward and Ambrosiadou countersued, claiming that the pair stole the formulas on an iPod. According to attorneys for Ms. Ambrosiadou, a high court injunction was granted against the twins and they were required to return the formulas. (No word on the status of the iPod.)

A former Ikos analyst Vincent Pfister admits to stealing the fund’s secret algos and Ambrosiadou soon suspects Coward of wanting to start his own hedge fund. Business Insider reports that she fired Coward’s 12 person research team but her attorneys contend that the team was employed by a third party who made the team redundant.

Things unravel. Ambrosiadou is accused of spying on employees with a former Israeli military-trained corporate espionage expert named Laura Merts. Other employees discover that they’ve been spied on.

Media outlets report that Amrosiadou confiscates Coward’s corporate jet - amid reports that Coward is romping around with a 23-year old Brazilian beauty - and buys herself the world's largest yacht for a exported $120 million. (Her attorneys claim that the jet was returned due to unpaid invoices.) In 2010, Bloomberg Markets names her the 4th best hedge fund manager in the world. That same year, Coward tells Ikos investors that he can no longer work at the firm.

Ikos' algos are special, say people who worked there. One employee tells Bloomberg Markets: "There is something extraordinary about the IT at Ikos... Ikos is designed to remove human emotions from trading decisions."

Now those emotion-free algos are the center of a bitter dispute in the Chancery Division of the High Court in London. Stay tuned for more dirt.

UPDATE: A number of points have been corrected and updated following an email from Ms. Ambrosiadou's attorneys in London.

[Inside the education of a quant.] Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio

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Anthony R. O'Donnell
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Anthony R. O'Donnell,
User Rank: Apprentice
3/9/2013 | 3:42:09 PM
re: Bitter Hedge Fund Divorce Battles For Custody of the Algos
There's something very amusing about emotion-free algos being the center of a bitter dispute.
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