US hedge fund executives pay $7 billion to settle tax dispute

Top executives at the Renaissance Technologies hedge fund will personally pay some $7 billion to settle a tax dispute with the IRS, one of the largest settlements ever, US media said.

Hedge fund founder James Simons will make an additional "settlement payment" of $670 million, the Wall Street Journal reported, citing a company letter to investors.

The payment is related to a dispute over decisions by the firm's Medallion fund between 2005 and 2015 and the way it was reported to the Internal Revenue Service, the US tax authorities: the IRS accused Renaissance Technologies of declaring shortterm trading gains as less heavily taxed long-term profits.

Renaissance Technologies, known for investment strategies based on complex computer models capable of digesting large amounts of information, said in the letter that the company "engaged for several years in the IRS Appeals process, in which we vigorously advocated the correctness of Medallion's tax reporting."

However, Renaissance's board "concluded that the interests of our investors from the relevant period would be best served by agreeing to this resolution with the IRS, rather than risking a worse outcome."

The payments will be made by a group that includes seven people who were members of the board between 2005 and 2015, as well as their spouses.

People who have invested in the fund during the period in question will also have to pay additional sums, and the group has recommended they consult a tax expert.

According to the Wall Street Journal, Medallion only manages money from company employees and a few relatives, not from outside investors. The company declined to comment when contacted by AFP, and the IRS did not immediately respond to request for information.

European stocks struggled Friday as caution prevailed before vital US non-farm payrolls data, while Tokyo rose on stimulus hopes after Japan's prime minister signalled his exit.

Investor sentiment in Asia and Europe was also buoyed somewhat following another record close on Wall Street.

London stocks added just 0.1 percent in late morning deals, and Frankfurt also won 0.1 percent in midday eurozone trade-but Paris sagged 0.3 percent.

The key payrolls data could have a huge bearing on the Federal Reserve's plans for tapering its ultra-loose monetary policy.

"The major risk to the equity rally is the Fed tapering," said Ipek Ozkardeskaya, senior analyst at online bank SwissQuote.

"And today's US jobs data could shake the Fed expectations to the hawkish or to the dovish side depending on the strength of the data."

Friday's subdued session came at the end of a strong week as concerns about the fast-spreading Delta variant, which weighed on confidence for much of August, gave way to optimism over the recovery outlook.

Data showing fewer people than expected applied for jobless benefits in the United States last week-the lowest since March 2020 -- provided a positive lead ahead of the NFP numbers, which could have a huge bearing on the Federal Reserve's plans for tapering its ultra-loose monetary policy.

Fed boss Jerome Powell last week indicated that the bank would take it easy in winding down the financial support-and would be even more careful in lifting interest rates-but offered no timetable for doing so.

Observers say a strong jobs reading would likely mean the Fed would move sooner than later.

The S&P 500 and Nasdaq on Wall Street finished at fresh records after the latest figures, and the buying filtered through to Asia and some of Europe.