An ex-DE Shaw executive has asked New York’s highest court to review work contracts at the wildly profitable hedge fund — claiming that they are being used to “silence” employees about alleged wrongdoing after they leave the firm.
Dan Michalow — who won a $52 million arbitration judgement in 2022 after he sued the firm for defamation following his headline-grabbing exit in 2018 — has asked the state Court of Appeals to take a closer look at the “release-to-pay’ language in DE Shaw’s employment contracts, claiming it effectively stops staffers from suing over any alleged discrimination, harassment, and retaliation.
“The scheme is designed to give DE Shaw’s senior executives a virtual get-out-of-jail free card so that they can harm employees and get away with it,” 43-year-old Michalow told The Post in a Tuesday interview.
The New York firm founded by billionaire David E. Shaw — whose algorithm-driven trades made it the most profitable hedge fund in 2024, raking in $11.1 billion for investors, according to Institutional Investor — counts Amazon’s Jeff Bezos and Bill Clinton’s Treasury Secretary Larry Summers among its former employees.
Last month, The Post exclusively reported how DE Shaw’s staffers feared reprisals from the Trump administration over the hedge fund’s DEI stance — prompting them to shelve diversity programs and scrub “woke” language from its website.
“David Shaw pretends to be this progressive and moral hedge fund manager, but he makes women and minorities who work at his firm give up their civil rights to collect their pay — and he is trying to normalize that practice for all New Yorkers,” Michalow said.
The Post has approached DE Shaw for comment.
Institutional Investor first reported on Michalow’s court petition on Monday.
In June 2022, Michalow won the largest defamation judgment in Wall Street history — $52 million in damages — after an arbitration panel set up by financial watchdog FINRA ruled DE Shaw had smeared him by falsely telling media outlets he had been fired in 2018 for sexual misconduct.
Michalow, who always denied any wrongdoing, left the company not long after the start of the #MeToo movement, where hundreds of rich and powerful men were accused of sexual misdeeds.
At the time, he refused to sign a release to shield the company from legal liability for any misconduct by its executives during his employment and three years after it ended. Any potential agreement also would have come with highly restrictive non-compete clauses.
According to Michalow’s court petition, DE Shaw claims the practice is “widespread” across the US financial industry — but Michalow counters that it’s not standard any any number of high-profile hedge funds, among them Citadel, Two Sigma and Jane Street.
“This is different from a very common practice, which is when firms pay extra severance or a settlement payment in exchange for a release,” Michalow said.
A March brief to the Court of Appeals written by Michalow’s attorney Jeremy Wallison claimed that DE Shaw “confiscated” more than $14.4 million of his pay when he declined to sign away his rights.
“What DE Shaw does is to say: we are not going to pay you the money you are otherwise owed unless you release claims for discrimination, sexual harassment, etc.”
“DE Shaw, which is one of the largest hedge funds in the world and a highly influential employer in the State, embeds the “release for pay” scheme in its standard contracts with its employees,” Wallison wrote.
As a result, the hedge fund is “systematically impeding hundreds of New York-based employees from filing suits for intentional torts, sexual harassment, racial discrimination – literally any form of misconduct the firm inflicts,” he added.
This newspaper also reported back in 2019 how billionaire financier David Shaw splashed out $37 million in donations to top Ivy League colleges in an apparent bid to secure places for his kids.
All three of Shaw’s children with his financial journalist wife Beth Kobliner went to Yale.
The 74-year-old is also a longtime Democrat party donor, having helped finance the presidential campaigns of Barack Obama, Joe Biden, and Kamala Harris.
