Bridgewater defends culture after ex-employee files complaint

By Svea Herbst-Bayliss

BOSTON (Reuters) - Bridgewater, the world's largest hedge fund, described its culture as a "real idea meritocracy" on Thursday and said it had made clients $1.3 billion so far this year in a rare public defense of its performance and operations.

The rebuttal was sparked by a story in The New York Times this week about a lawsuit filed by a former Bridgewater employee, who described the atmosphere at the $154 billion firm as a "cauldron of fear and intimidation."

Bridgewater's unconventional management style - where meetings are videotaped and employees openly challenge each other and give themselves continuous performance feedback - is driven by founder Ray Dalio's belief that "radical transparency" produces better investment ideas.

But a former employee, Christopher Tarui, said the culture silenced employees who did not fit in. In a complaint filed with the Connecticut Commission on Human Rights and Opportunities, Tarui said his male supervisor sexually harassed him for about a year and after he complained, several Bridgewater top managers pressured him to drop the claims.

Tarui did not respond to Reuters' attempts to contact him.

'CULTURE OF OPENNESS'

Bridgewater declined to discuss Tarui's complaint but in a two-page memo, the firm said it has an anonymous "complaint line" for employees and there was an Employee Relations team that handles issues of a personal nature in a confidential manner.

"While we acknowledge that this culture of openness is not for everyone, our employees overwhelmingly treasure this way of operating," the firm said in the memo.

Turnover at the Westport, Connecticut-based firm is known to be relatively high, with an estimated 25 percent of staff departing during the first 18 months of employment.

In the memo, Bridgewater said it scored 4.4 out of 5 when it asked staff to rate the statement, "I believe that Bridgewater's culture and principles are key to its success," in a recent anonymous survey.

Bridgewater also denied that it had lost billions of dollars for investors as a result of mixed performance over the past two years.

"In 2015, our Pure Alpha fund had its 15th consecutive year of positive returns. This year, year-to-date, we have made $1.3 billion for our clients across our strategies," the firm said.

The firm said this was less than it expected. Still, it said clients had faith in the firm and had invested "$12 billion in new assets over the last seven months."

A spokeswoman for the New York Times did not immediately respond to a request for comment.

The firm's flagship Pure Alpha fund was off roughly 8 percent this year after having gained 4.7 percent last year, a person familiar with the number said. Its All Weather fund, meanwhile, is up more than 10 percent this year after having lost 7 percent in 2015, the person said.

(Reporting by Svea Herbst-Bayliss; Editing by Carmel Crimmins and Bernadette Baum)

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