James Simons, Robert Mercer, Others at Renaissance to Pay Up to $7 Billion to Settle Tax Probe – WSJ

Current and former executives of hedge fund Renaissance Technologies LLC will personally pay as much as $7 billion in back taxes, interest and penalties to settle a long-running dispute with the Internal Revenue Service, the firm said, a tax settlement that may be the largest in history.

James Simons the quantitative-investing pioneer who started Renaissance before retiring as the firm s chairman on Jan. 1 will make an additional settlement payment of $670 million, according to the firm. Mr. Simons will also pay back taxes related to his gains.

The dispute relates to moves the firm s key Medallion fund took between 2005 and 2015 to convert short-term trading gains into long-term profits. It has been closely followed in the worlds of finance and politics because of the enormous amounts involved and because Renaissance s leaders are among the largest political donors in the U.S.

A former math professor and code breaker, Mr. Simons built Renaissance into one of the most successful investment firms in history by identifying short-term patterns in the market that others missed. But those short-term trades also mean higher taxes.

Mr. Simons has been a long-term supporter of Democratic candidates while Robert Mercer, another Renaissance executive, has backed Republican causes, including former President Donald Trump.

via www.wsj.com