Sept 19 (Reuters) - Hedge fund Two Sigma is likely to

have to pay as much as $100 million to resolve a U.S. Securities

and Exchange Commission probe into a trading scandal at the

firm, the Wall Street Journal reported on Thursday.

The U.S. hedge fund is likely to be held accountable for how

it oversaw an ex-employee at the center of the misconduct,

which led to hundreds of millions of dollars in unexplained

losses and profits, the report added citing people familiar with

the matter.

The researcher allegedly modified trading models without

authorization. Two Sigma and the regulator are in talks and the

outcome could be a lower payment for the firm, the people added.

The SEC and Two Sigma did not immediately respond to

Reuters' requests for comment.

Two Sigma co-founders John Overdeck and David Siegel decided

to step down as Chief Executive Officers in August.

The hedge fund, with $60 billion in assets under management,

disclosed in a regulatory filing last year that a rift between

its top managers poses governance challenges and a material risk

for the firm.

Both Overdeck and Siegel, who founded Two Sigma in 2001, are

to continue as co-chairmen.