“These are people that were typically very conservative about that kind of thing,” he said in an interview. “There was never any desire to do anything that was operating on the edge. It’s a pretty honorable group of people.”
University Ties
Frey is now a professor at Stony Brook University, which has close ties with employees at Renaissance and is located near the firm’s headquarters on the north shore of New York’s Long Island.
Simons, who holds a bachelor’s degree from the Massachusetts Institute of Technology and a doctorate from the University of California, Berkeley, is a former chairman of the Stony Brook math department and has a geometric theorem named after him. He left academia in 1977 to manage money. At Renaissance, he assembled a team of Ph.D.’s who turned their math skills to buying and selling stocks and futures, creating computer programs to identify profitable trades.
Its flagship Medallion fund has returned about 80 percent annually before fees since 1988, according to the Bloomberg Billionaires Index.
Simons and other Renaissance employees own almost all of the fund. Medallion stopped new investments from outsiders in 1993 and kicked out most non-employee investors in 2005.
The Billionaires Index estimates that Simons has earned at least $10 billion from Renaissance over the years. Institutional Investor’s Alpha estimated that he earned $1.1 billion last year alone.
Ex-Treasury Official
Renaissance’s legal team in the dispute includes Kenneth W. Gideon, a former IRS chief counsel and former assistant Treasury secretary for tax policy. He’s now a partner at Skadden Arps Slate Meagher & Flom LLP in Washington. Gideon declined to comment, other than to confirm he is counsel to Renaissance in an IRS dispute.
Edmund S. Cohen, a lawyer at Winston & Strawn LLP in Washington, helped Renaissance set up the trades and supplied a legal opinion stating that the arrangements complied with tax laws, the people with knowledge of the matter said. Cohen declined to comment.