When you work for a major hedge fund, it can be hard to leave - especially if you're a particularly valued member of trading staff. In this case, you can find yourself slapped with a non-compete clause that prevents you from working elsewhere for two whole years.
Citadel is a case in point. Headhunters say the fund uses punitive two year non-competes for various staff. One of those afflicted has just confirmed this.
Yi Zhang joined Citadel in 2011 after completing a doctorate in machine learning at Carnegie Mellon University and working as a research intern at IBM's Watson Research Center. Over the next six years, he rose to become a quantitative researcher in Citadel's Chicago office, working on "alpha generation" for statistical arbitrage and high frequency trading.
Zhang quit Citadel in May. It's not clear what he intends to do next, but with the two year non-compete he can't do anything for 24 months anyway.
In the absence of another quant trading job, Zhang's LinkedIn profile says he'll be employed by his wife as, "Chief Scientist of babysitting, Senior VP of formula feeding and Chief Food Innovation Officer (primarily by ordering takeout)," and that he's, "especially interested in the use of AI & Machine Learning in the above roles."
Zhang doesn't say so, but the upside of Citadel's non-competes is that you generally get paid while you sit out of the market mixing baby formula. The downside is that Citadel policies its policy pretty ferociously. In 2009, Citadel was compensating Mikhail Malyshev, the former head of its high frequency trading firm $30k a month for sitting out of the market – but when Malyshev tried setting up his own firm during the non-compete period, Citadel pursued him in court.
Two years isn't forever and it might be argued that Zhang's lucky to have this time with his family. While he appears to be making the best of it, he's also clearly a bit irked by the situation. Under his present employer, he's listed: "My wife." Next to non-compete, he's written: "Lifetime."
Citadel's nasty non-competes don't seem to be persuading senior traders from joining. As we reported yesterday, it's just hired Bridgewater's head of trading in New York.