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On an after-tax basis, people could make twice as much without taking interest rate risk or market risk. He later became chief financial officer for a privately held multinational trading company and, after that, managed money for partners at a New York law firm.

He started Paloma Partners in 1981. The firm is named after Paloma Picasso, the Tiffany & Company jewelry designer. Sussman's career has been driven by intellectual stimulation, pride in a job well done, as well as professional respect.

Sussman describes the culture as entrepreneurial as well as where a premium is placed on intellect. A large number of the professionals have advanced degrees with significant experience. Sussman also describes the culture as a big family atmosphere—easygoing in dress and demeanor. "We encourage people to seek an environment that makes them most productive."

Today, four funds are offered to U.S. investors and three to offshore investors. There are over 300 clients; most are U.S.-based. Insurance companies, family offices, and institutions are the core investors. Paloma Partners is the oldest and largest. Paloma Partners Institutional Investors, Capital Preservation Partners, and European Merger Fund also are offered to U.S. investors. Paloma International Fund, Capital Preservation Partners Limited, and European Merger Fund Limited are available to offshore persons.

Where does Sussman see Paloma going? His goal is to build the firm into an institutional entity, yet retain his role as the person identifying opportunities and allocating capital.

Sussman sees the hedge fund industry growing in the years ahead. His main concern is that empire building will lead to some problems as some managers grow uncontrollably. "Investors need to know who is trading the money and how much they are getting paid to trade it." In some cases, says Sussman, the main manager hires lesser-known managers, who are paid considerably less, to handle subportfolios. Another issue is that when asset size is too large, a manager may have difficulty getting out of wrong ideas.

PASSION FOR THE ENVIRONMENT

In addition to sailing, Sussman has a passion for the environment. He says this interest was sparked by his two children, who have been vege-