Bridgewater Associates LP lost an arbitration dispute it had brought against two former investment employees who started their own hedge fund, a rare setback for Bridgewater that could hamper its ability to limit former employees’ options after they leave the firm.

The world’s largest hedge fund, with $140bn in assets, Bridgewater is run by billionaire Ray Dalio. Dalio has gained widespread recognition beyond the hedge-fund world in advocating for what is known as radical transparency in managing companies.