Rich & Kevin Gates are identical twins who founded TFS Capital, an asset management company specializing in alternative mutual and hedge funds, 18 years ago.

Conestoga High School grads (Class of ’90) who now live in West Chester, the Gates twins have been covered frequently by national media for their involvement in high profile market structure stories.

In one post in March, VISTA Today discussed Rich’s role exposing abuses in the stock market and was profiled as a hero in Michael Lewis’s best-selling Flash Boys: A Wall Street Revolt.

In the second story, a different firm the Gates’ managed separate from TFS, is embroiled in a battle against the Federal Energy Regulatory Commission (FERC) over allegations of market manipulation. In that saga, they released previously non-public information at www.ferclitigation for the world to see.

VISTA Today asked Rich and Kevin about growing up in Chester County the youngest in a family of six kids, how they parlayed their stint as quant geeks for credit card-giant Capital One into their own mutual fund company and their epic David -vs- Goliath battle with energy regulators in Washington DC.

Where did you grow up?

We were born in Denver and moved to Valley Forge when we were in kindergarten. We went to Valley Forge Elementary, Valley Forge Junior High and then Conestoga High School in the Tredyffrin-Easttown School District. Dad grew up in Pottstown and mom was from northern New Jersey.

How many children were in your family?

We are the youngest of six children with a 16-year difference between us and our oldest sibling. Our mother was 42 years-old with four kids at home when we were born.

What did your dad do?

Dad was the first in his family to go to college and started out as an engineer, but ended up in management in the roofing industry. He was laid off by CertainTeed during the recession in the early 1980’s.

How did your father handle that?

It was a tough time. He had a family with six kids and our mom was also battling leukemia. She was diagnosed with it when we were in second grade and passed away when we were in seventh grade. But, dad is incredibly resilient, decent, and smart. He finished his career doing consulting work while also ensuring we had a wonderful childhood. He is an awesome role model.

What was your mother like?

She was small, funny and well-liked by everyone. She was also feisty, a trait we inherited. If she were around today, we think she’d be proud of us.

What jobs did you have when you were kids?

We were very entrepreneurial at a young age. While in elementary school, we always had odd jobs. We sold Jolly Ranchers candies at recess, walked dogs in the neighborhood, painted street numbers on curbs and washed cars.

Our first formal job was with a man who cleaned office buildings. He was a cleaner dad hired to help keep our house neat after our mother passed away. The cleaner told my father he needed help, so in eighth grade we’d jump into his van after he had finished our house to assist with his other customers.

The commercial cleaner called us the “rich boys.” He told us we were the only ones in our area who would work for him. We didn’t feel “rich.” Our dad drove a Honda civic and our summer vacations were a week in Wildwood. But, it made us realize there were socio-economic classes beneath us.

During school years while at Conestoga, we worked at Waterloo Gardens in Devon and Pizza Hut in Paoli. During the summers from 8^th grade to the first year after college, we worked for College Pro painting.

You did all these jobs together?

Yeah. We generally had the same interests and friends. Plus, working together made the travel logistics easier. We also went to college together, had the same major and even went to work for the same bank after college.

Did you play sports in high school?

We played a lot of sports but wrestling was our favorite. Our dad went to almost every match, both home and away, missing just one over the three years that we competed in high school. In wrestling and everything else we did, dad fully supported us. He encouraged us to believe in ourselves, work hard, and take calculated risks.

What kind of music did you like in high school and college?

In high school, we liked classic rock and roll like most other kids at that time. In college, we both started to pay attention to Metallica. Kevin also developed an interest in Rage Against the Machine and other “angry music” as Rich’s wife likes to call it. These days we both listen to a lot of Eminem. We appreciate his competitive spirit and verbal vigor.

Where did you go to college?

We both went to the University of Virginia after we graduated from Conestoga High School in 1990.

Why the University of Virginia?

We looked around at different colleges and liked UVA’s size, culture, academics and campus. We were accepted to UVA early decision.

What was your major?

We both majored in Chemical Engineering because we liked math and science. Our coursework didn’t offer a lot of flexibility, but we were each able to take a few elective classes in economics and personal finance.

So you graduate from UVA in 1994. What’s next?

We were both engineering majors who didn’t want to do engineering. Instead, we got a job doing data analytics in the credit card division of Signet, a small regional bank in Richmond, Virginia. Shortly after we started, the company spun off the credit card business issuing an IPO for Capital One.

We realized pretty early on after graduating college that we had the entrepreneurial bug. So, on the side, we tried to start ventures in both retail and marketing. They each failed. But we also started analyzing stock market data that was becoming available on the Internet. We used it to develop trading strategies.

After a year or so of fiddling around with it, we decided to go for it for real. So in 1997, Rich quit his job and then started working like crazy in the spare bedroom of a rented house to get TFS Capital off the ground. Kevin and the third founder of TFS each gave Rich a third of their paychecks and focused on the new business outside of normal working hours.

TFS developed a track record prior to the financial crisis in 2008. After that market turmoil, it was relatively easy to attract new clients. Interestingly, the Bernie Madoff scandal also helped us as more investors shifted their assets from hedge funds to more regulated mutual funds.

Why did Powhatan Energy Fund respond the way it did to the FERC?

We wanted to protect our reputations and FERC left us with no better option. Our response at www.ferclitigation.com may also have the secondary benefits of enabling our country to make more effective energy policy and regulations, shedding light on crony capitalism, exposing the way large financial interests influence politics, and holding our government accountable for its actions.

What challenges and opportunities do you see on the horizon?

Politics are misguided right now. There’s been a backlash on financial services companies since the 2008 financial crisis. It is politically expedient to criticize people on Wall Street even though a vast majority of those people are doing their jobs ethically.

The wholesale power markets in the United States are a frontier market. While other markets in our country have become more efficient, the power markets have been moving backwards. The improper application of regulatory authority has increased the risk that you will be caught up in a nonsensical, but costly, inquiry. We believe this has scared away a number of players including Deutsche Bank and JP Morgan. On the flipside, there are tremendous opportunities because the markets are so inefficient.

For TFS, we are excited about what we are seeing in international equity markets. It represents an area of opportunity for quantitative long short strategy development.

What was the best piece of advice you were ever given?

Our father encouraged and supported us doing entrepreneurial things. He was our first TFS Capital investor! He always encouraged us to get a college degree that would give us analytical skills. He told us if we had an engineering degree we could either stay in engineering or go into business. I am not sure he anticipated how prescient his advice would prove to be.

This is also a good spot to give a shout out to the women in our lives! Rich married his college sweetheart and Kevin met his wife in his late 20s. They are both wonderful women who work in the healthcare industry, catering to the low income and needy populations. They frequently remind us both to slow down and enjoy life outside of work.