A trader is suing his former employer for withholding a performance-related bonus – after he claims he brought in 97% of the hedge fund’s revenues that same year, according to court filings.
Robert Gagliardi, a block trading specialist with the nickname “Gags,” alleged Evolution Capital Management acted in bad faith by refusing to pay him a $7.5 million bonus – even after he generated more than $60 million for the firm between April 2021 and March 2022.
In written arguments for a London court hearings, Gags claimed that when he asked the fund’s founder Michael Lerch for the bonus in 2022, he shot back: “I’m not going to pay you the bonus, f–k you, sue me.”
Gagliardi is suing Evolution for breach of contract, claiming that he was told in early 2021 that a return of $10 million would be an “excellent result.”
According to Gagliardi, a major investor in Evolution, Zoltan Varga, at one time said, “Gotta give it to Gags. Guy sure can make money!”
Evolution retorted that it was entitled to use discretion in whether or not to pay Gagliardi the bonus, and alleged that he breached his terms of employment.
The company also accused the trader of “abrasive attitude to senior management.”
Evolution argued it did not award Gagliardi the bonus because of his “generally difficult attitude,” but that “matters deteriorated” when Gags’ trades were investigated by the US Department of Justice.
Prior to joining Evolution, where Gagliardi worked for just 11 months, the trader worked at Segantii Capital Management.
Gagliardi’s trades came under scrutiny as part of a criminal investigation and related Securities and Exchange Commission probe into Morgan Stanley.
The bank last year agreed to pay $249 million to settle claims that it generated more than $100 million in illicit profits as a result of misconduct by Pawan Passi, the former head of the bank’s US equity syndicate desk.
In previous court filings, Evolution said it believed Gagliardi referred to Passi as his “daddy” who had “put [him] in the f—ing game” on block trades.
Passi was ordered to pay a $250,000 civil penalty by the SEC.
Gagliardi was cleared of wrongdoing in the DOJ case, which he reiterated in a recent court filing. He denied claims that his relationship with Passi was inappropriate.
Evolution is countersuing for the $7 million it paid Gagliardi during his 11-month stint with the hedge fund, arguing that his close relationship with Passi was a breach of trust.
The hedge fund told Gagliardi it was ending his contract in February 2022.
Segantii, Gagliardi’s former employer, was one of Asia’s largest funds with nearly $5 billion in assets under management.
The firm last year told investors it would give back their money just weeks after Hong Kong’s securities commission announced it would bring criminal proceedings against the firm, its founder and a former trader for insider trading.
Segantii and the two employees involved in the case have pleaded not guilty.
