Two Sigma Suspends Survey After BlackRock Settlement

Feb 07, 2014 4:38 pm ET

(Corrects first paragraph to show BlackRock did not pay a fine.)

Feb. 7 (Bloomberg) -- Two Sigma Investments LLC, an $18 billion quantitative hedge-fund firm, last month suspended a survey designed to gather stock information from analysts after BlackRock Inc. agreed to end a similar program.

“We voluntarily suspended our analyst survey program in mid-January as the BlackRock settlement may represent a change in the law regarding equity analysts’ communication with their clients,” Todd Fogarty, a Two Sigma spokesman at Kekst and Co., said in a statement. “A compliance-minded firm carefully studies what its regulators say and we are doing exactly that.”

BlackRock, the world’s biggest money manager, last month agreed to end its analyst surveys that New York Attorney General Eric Schneiderman said could be used to execute trades based in part on nonpublic information. The firm agreed to pay New York state $400,000 to cover the cost of the investigation, while neither admitting or denying the claims, according to the settlement. BlackRock’s program sought data including analyst views on the likelihood of a surprise to their forecasted earnings estimates, according to the pact.

Two Sigma, based in New York, was started in 2001 by David Siegel, a former chief technology officer at Tudor Investment Corp., and John Overdeck, a former managing director at D.E. Shaw & Co. The New York-based firm, which started its analyst survey program in 2008, uses complex mathematical models to decide when to buy and sell securities.

The Wall Street Journal reported Two Sigma suspending its survey earlier today.

--Editors: Sree Vidya Bhaktavatsalam, Josh Friedman