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Citadel has hired Richard Schimel, the co-founder of defunct hedge fund Diamondback Capital Management, as Ken Griffin’s $24bn asset manager adds a fourth unit to invest in equities.

Mr Schimel joins in July and is aiming to have between six and eight teams within the first year running long-short equity portfolios within the multistrategy hedge fund. Each team, with up to nine people, will focus on a different sector of the S&P500, writes Mary Childs in New York.

“It’s a great environment to recruit talent and to start a platform, but you obviously need scale, infrastructure, resources, and I feel like if I was going to do that again, I might as well be with the best,” said Mr Schimel.

First, though, he is working to shut Sterling Ridge Capital Management, a hedge fund he started at the end of 2013 and which oversaw $250m at the start of the year.

Launching a hedge fund is more challenging now than it had been, and “the big are getting bigger,” he said, and that gives the advantage to funds like Citadel in attracting good traders.

Mr Schimel co-founded Diamondback in 2005, and it reached almost $6bn before it became one of the hedge funds raided by US federal agents in 2010 amid the government’s insider trading investigations. In 2012, Diamondback said it would close after some investors asked for their money back.

The firm and Mr Schimel were not accused of wrongdoing, and the Securities and Exchange Commission returned some of the original settlement Diamondback paid.

Copyright The Financial Times Limited 2017. All rights reserved.

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