A spokesman for the firm said Simons, Brown and Mercer weren’t available for comment.
Seven years ago, the Senate Permanent Subcommittee on Investigations revealed that, for more than a decade, Renaissance used options sold by Deutsche Bank AG and Barclays Plc to shelter some $34 billion of income in Medallion, cutting the rate paid by fund investors by as much as 20 percentage points.
Brown and other Renaissance executives defended the transactions at a hearing in Washington, arguing that the firm had entered into the deals for non-tax reasons and that they complied with the law.
The hearing “really knocked the IRS around and shook them up to start pursuing this more aggressively,” said Steven Rosenthal, a tax lawyer and senior fellow at the Urban-Brookings Tax Policy Center in Washington who also testified. “The IRS is so resource-strained that it often can’t pursue good cases, but here they nabbed one.”
Medallion is one of the best-performing funds in history, returning about 40% annualized since its formation in 1988. Simons has a net worth of $25.7 billion, according to the Bloomberg Billionaires Index.
--With assistance from Katherine Burton.
This article was provided by Bloomberg News.