SEC Investigates Two Sigma for Manipulated Trades, WSJ Reports

The Securities and Exchange Commission (SEC) is investigating Two Sigma Investments LP, a hedge fund managing around $60 billion, over a researcher who manipulated the firm's models to boost his compensation. The changes resulted in unexpected gains and losses of $620 million across its funds, with gains of $450 million for employee-invested funds and losses of $170 million for clients. Two Sigma has informed investors about the misconduct and has stated that it will consider compensating for any losses. The incident comes amidst existing troubles within the firm, including a rift between its billionaire co-founders that has been deemed a material risk.