Six of Bank of America Securities' New York equity derivatives team resigned last week to set up a market-neutral multi-strategy hedge fund. The six plan to raise USD400-500 million for the fund and will use over-the-counter derivatives, according to market officials. The fund is hoping to secure seed capital from HBK, a hedge fund in Dallas, one of the officials added. A spokesman at HBK declined comment. The group will also hire additional researchers and quants for the hedge fund.
The officials who resigned include four managing directors, John Illuzzi, global head of volatility trading, Andrew Mitchell, senior options trader, Nathaniel Newlin, head of index trading and Van Nguyen, global head of trading. The two other staffers to resign were Tim Walton and Venk Reddy, both risk systems professionals, according to Jonathan Sandelman, managing director and global head of equity financial products at BofA in New York. The six declined comment or could not be reached.
Sandelman, said the group's departure was prompted by the traders' desire to venture into proprietary trading, a move that was not accessible to them at BofA. He added that the firm already has proprietary traders and positions were not open. "This is not exactly devastating. This will give us an opportunity to go into the market place and look around for new people. We're excited about surveying the talent," Sandelman said.
