As Lehman’s fixed-income boss, he was among those at the epicenter of the bank’s crisis a decade ago. Gelband urged executives that his group needed safeguards put in place for its burgeoning subprime mortgage holdings two years before the bank collapsed. Lehman’s chief Richard Fuld rejected such hedging as too costly. Gelband was ousted in 2007. He returned the following year to help the bank deal with its financial crisis.

ExodusPoint Fees
ExodusPoint’s launch comes as the industry struggles with growth. Clients placed $9.8 billion with funds last year, the least amount since 1998, according to Hedge Fund Research. And for three years running, the number of traders starting out has been outnumbered by those shutting.

Gelband also bucks industry trend in another way: his hedge fund is one of the most expensive.

Instead of charging the standard fixed management fee, ExodusPoint will pass on unlimited costs to investors that are expected to be “substantial” over time, according to a regulatory filing. Millennium and Citadel also pass on costs. ExodusPoint’s clients will be on the hook for everything from bonuses and broker commissions to private air travel that’s the equivalent of first-class airfare and recruiting costs, the filing shows. While investors will pay for office furniture, they don’t cover the artwork.

The fees are a bold move in an environment where investors are fighting back against pricey money managers who produce paltry returns. Management fees have edged down on average to about 1.4 percent of assets from 2 percent, according to HFR.

Leaving Millennium
Before Gelband, Harvard University’s former endowment chief, Jack Meyer, held the record for the biggest launch, raising $6.3 billion for his hedge fund 12 years ago.

Gelband’s startup marks a decade since Englander hired him and tasked him with building up Millennium’s fixed-income business. Lee, who had worked with Gelband at Lehman, joined soon after and later ran equities.

As Gelband grew Millennium’s fixed-income group to as many as 45 teams, Englander saw him as someone who could step into the founder’s shoes if needed. While Englander’s lucrative hedge fund expanded, Gelband sought a more prominent role and a stake. That didn’t happen. Gelband then blindsided his boss in January 2017 by abruptly quitting.

Read more about Gelband’s exit from Millennium here

Englander and Gelband spent a good part of last year feuding over when he could start his new business and hire former colleagues. The pair resolved their dispute in December after arbitration. A person close to Gelband said the name ExodusPoint is a Biblical reference.