Morgan Stanley Trader Teichholtz Joins Hedge Fund Pine River

Colin Teichholtz, co-head of liquid rates trading at Morgan Stanley, is leaving the company to join hedge fund Pine River Capital Management LP, according to two people familiar with the move.

Teichholtz, 40, helped lead a group at the New York-based securities firm that traded Treasuries, interest-rate swaps, agency debt and government-backed mortgage bonds. He will work in New York for Minnetonka, Minnesota-based Pine River, said the people, who declined to comment because the information isn’t public. Teichholtz declined to comment for this article.

Hedge funds may step up hiring from investment banks after firms including Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. cut compensation pools and deferred pay to appease regulators seeking to reduce risk-taking in the wake of the financial crisis. Average bonuses among 1,009 U.S. respondents dropped 5 percent in 2010 from the previous year, a survey by eFinancialCareers.com released last month showed

Performance at hedge funds climbed 1.7 percent last month, reaching a two-year high as global stock markets rallied.

Teichholtz, who began at Morgan Stanley in 2003, is joining a firm whose Nisswa Fixed Income Fund Ltd. ranked No. 7 in Bloomberg Markets magazine’s 2010 list of 100 best-performing hedge funds managing $1 billion or more. It returned 27 percent in the first 10 months of the year, the period covered by the rankings.

Patrick Clifford, a spokesman for Pine River, said the company couldn’t comment “at this time.” Mary Claire Delaney, a spokeswoman for Morgan Stanley, declined to comment.

Morgan Stanley Chief Executive Officer James Gorman has made changes in the firm’s trading unit after fourth-quarter revenue from the fixed-income business was less than half that of its rivals. The company last month replaced fixed-income trading head Jack DiMaio with Ken deRegt, and hired Glenn Hadden from rival Goldman Sachs Group Inc. as global head of interest rates.

Jared Work, a Morgan Stanley trader of 30-year government- backed mortgage bonds, also left the company this year, said one of the people. Work declined to comment.

To contact the reporters on this story: Jody Shenn in New York at jshenn@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net