Harley Bassman, the derivatives expert who invented the main gauge of Treasury volatility, has escalated a dispute with his former employer, Simplify Asset Management, by sending a letter to shareholders challenging the firm's business practices. Bassman, who is separately suing Simplify over disputed compensation, remains the exchange-traded fund issuer's fourth biggest common shareholder. In the letter sent ahead of Simplify's first-ever shareholder meeting in August, Bassman laid out a dozen questions for the board, alleging the firm is overstating its growth, charging improper fees, and overriding strategies for idiosyncratic bets. He labeled the practice of funds investing in other Simplify ETFs as "Russian doll stacking," noting that around 38% of the firm's $13.6 billion in assets traces back to other Simplify ETFs. Notably, the Simplify Volatility Premium ETF (SVOL), which has seen assets more than halve from $1.26 billion, holds ten other Simplify funds, including strategies focused on Chinese shares and municipal bonds that appear misaligned with its VIX shorting objective.

Simplify co-founder and CEO Paul Kim dismissed the letter as a "one-sided narrative from an ex-employee," stating the firm has grown by helping clients meet portfolio objectives and that its investors are predominantly professional RIAs and institutional asset managers. Kim said holdings in other Simplify funds are primarily for cash management or fund-of-funds strategies, are disclosed daily, and follow all regulatory requirements. The clash highlights growing headwinds for Simplify, co-founded in 2020 by Kim, a former Pimco employee, amid intensifying competition with 988 new ETFs launching in the US this year.