#HEDGEPAPERS NO. 29 – HIDDEN DONATIONS BROUGHT TO LIGHT: HOW THE WEALTHY ELITE TRIED TO DEFEAT PROPOSITION 30

In 2012, California voters widely supported Governor Brown’s Proposition 30, a ballot measure designed to raise revenue for public schools. It was premised on the common sense idea that the state’s millionaires and billionaires pay their fair share of taxes to fund public schools.

Many of the wealthiest Californians, especially hedge fund managers and private equity investors, did not like that they were being pressured to pay higher taxes. They hid their involvement in the “no” campaign by contributing to Americans for Job Security, a Virginia-based 501(c)4 organization. Their contributions were then funneled through two separate Arizona-based groups in an attempt to shield the wealthy donors’ identities. Presumably they knew that a public campaign against Proposition 30 would draw too much scrutiny and put them on the defensive.

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Open Letter to the Sohn Conference Foundation

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ON HEDGE FUNDS, PHILANTHROPIC HYPOCRICY & CANCEROUS CASH

 

April 30, 2016

The Sohn Conference Foundation
c/o COO Tiffany Stevens & Paula Bernstein, Development Manager
750 Third Ave, 22nd floor
New York, NY 10017

SENT VIA EMAIL
Board of Directors: Douglas Hirsch, Daniel Nir, Evan Sohn, Graham Duncan

RE: Concerns regarding the Sohn Conference Foundation mission and scheduled speakers at the 2016 Sohn New York Investment Conference

To the Board:

In 2015 we wrote a letter raising serious concerns regarding the mission of the Sohn Conference Foundation and the scheduled speakers at the Sohn Investment Conference who do business in direct conflict of your mission.

This year we are, again, outraged. And so we write again, now aligned with leading grassroots environmental organizations 350.org and Greenpeace, to voice our concerns together, and louder.

Several of the billionaire and multimillionaire hedge fund managers associated with the Sohn Conference Foundation are currently piling into fossil fuel investments, supporting pro-fossil fuel think tanks, and funding climate change denying politicians.

Their investments, philanthropy and campaign cash actually cause cancer.

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#HedgePapers No. 28 – Hedge Funds and Fossil Fuels

air-pollution

Fossil fuel companies are at the root of the climate crisis. Indeed, according to a recent study in the journal Climatic Change, the climate crisis of the 21st century “has been caused largely by just 90 companies, which between them produced nearly two-thirds of the greenhouse gas emissions generated since the dawning of the industrial age.”[1] The vast majority of those 90 companies are in the business of producing oil, gas or coal. Some are household names like Chevron, Exxon, BP, and Royal Dutch Shell. But the fossil fuel industry does not exist in a vacuum. There are a host of other industries that legitimize, bolster, and enable fossil fuel corporations to continue their business of releasing carbon into the atmosphere.

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#HedgePapers No. 27 – Closing Wall Street’s Lucrative Loophole: How States Can Raise Billions by Taxing Carried Interest

pile of cash

Across the country, states stand to gain many billions of dollars in revenue by closing the carried interest loophole. It’s a long overdue element of financial reform that the federal government has failed to enact.

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#HedgePapers No. 26 – Puerto Rico: Pain and Profit

pr flag capitolio

As 2015 came to an end, there was much speculation about the January 1st deadline for Puerto Rico to pay its creditors. There was no question that the island would default on its almost $1 billion in debt payments, but no one knew precisely how large that default would be. When the deadline arrived, Puerto Rico defaulted on only $37.3 million, a much smaller amount than many had feared.[1] Some bystanders speculated that because the island could still pay 97% of their debts, the government was exaggerating the extent of their crisis.[2]

That argument not only belies fiscal reality – the Puerto Rican economy has shrunk over 10% since 2006 – but also disregards the tremendous suffering the Puerto Rican government is imposing on its people in order to pay its creditors. With a poverty rate already at an alarming 45%, the island’s austerity budget is quickly turning its debt crisis into a full-fledged humanitarian disaster.[3]

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#HedgePapers No. 25 – Endangered Endowments: How Hedge Funds Are Bankrupting Higher Education

Harvard-College-Cambridge-MA-Widener-LibraryThe Harmful Role of Hedge Funds in University Endowments

University endowments play an important role in the lives of students, faculty and other campus workers. Endowments are funded by donations, and universities use the investment returns to pay for improvements to buildings and facilities, provide scholarships, fund teaching and learning, and provide other services and economic support to the surrounding community.

Over the last decade, however, a troubling trend has emerged: Hedge funds—largely unregulated, high-cost investment vehicles run by the ultrawealthy—are managing larger and larger portions of these endowments, and charging universities the highest fees in the business to do so.

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Partner Paper No. 3: Wall Street Money & Massachusetts Schools

Hedge Clippers is happy to partner with Massachusetts Jobs With Justice to bring you a new expose on how huge amounts of out-of-state hedge fund cash is now pouring into Massachusetts to fund lobbyists and politicians with the aim of privatizing education in the Bay State.
Read Wall Street Money & Massachusetts Schools
Since 2014, hedge fund managers have spent millions to try to eliminate New York’s cap on charter schools, with much of that money funneled through Families for Excellent Schools. FES organizes charter school parents to lobby for charter school expansion, and was essential to pulling off the large pro-charter rallies in Albany and NYC that have helped advance Governor Andrew Cuomo’s school privatization agenda. It spent more than $9 million on political lobbying, a state record.

With a few victories under its belt and a start-up grant possibly earmarked by Boston hedge fund billionaire and Republican money man Seth Klarman FES expanded its operations into Massachusetts, where the fight over charter school expansion is starting to heat up (and where the Secretary of Education is also an FES trustee!).

This report explores how Wall Street financiers created, control, and fund FES to advocate for more charter schools.

Read Wall Street Money & Massachusetts Schools
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Partner Paper No. 2: All That Glitters Is Not Gold — An Examination of US Public Pension Investments in Hedge Funds

Pyrite_(Fools_Gold)A new report by our colleagues at the American Federation of Teachers and the Roosevelt Institute has found that public pension investments in hedge funds aren’t paying off. The eleven pension systems studied received absolutely no benefit from their investments in hedge funds, with high fees eating up all of the returns and stated investment strategies failing to pan out.

The report finds that pension investments in hedge funds really turn out to be a transfer of wealth from hard-working public employees to greedy billionaire hedge fund managers.

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#HedgePapers No. 24 – Puerto Rico Hedge Fund Vulture Holdouts

Los Tiranos, Los Vampiros, y El Terminator
(The Tyrants, the Vampires, and the Terminator)

The Puerto Rican debt crisis has recently reached a new stage in negotiations between the government and its bondholders: deals have been reached with many creditors and ad hoc groups have fallen apart, but several creditors are continuing to hold out, intending to squeeze massive profits out of a Puerto Rico on the brink.

Unsurprisingly, this holdout group is led by hedge funds, and unyielding billionaire hedge fund managers.

Sources close to the negotiations have named three of the vulture holdouts: Aurelius Capital Management, Brigade Capital Management, and Monarch Alternative Capital.

None of the three hedge funds is particularly well known – they mostly toil in the arcane, under-scrutinized world of distressed debt, in which “vulture funds” use heavy-handed legal and bargaining tactics to extract maximum profit from failing companies and debt-ridden economies.

They aren’t household names, but they ought to be – the effects of their business practices are felt far and wide in the US and beyond.

Meet Los Tiranos (the tyrants), Los Vampiros (the vampires), and El Terminator.

This report is based on our information regarding the current state of play in the Puerto Rico debt crisis — it will be updated if and when new information is available.

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#Hedgepaper No. 23 – HEDGE FUNDS AND THE GOP PRESIDENTIAL CANDIDATES

Your Boulder Debate Scorecard

Billionaire hedge fund managers stand astride the worlds of Wall Street and Washington like giants, using millions in campaign cash and lobbying retainers to expand their wealth.

  • Hedge fund managers benefit from the “carried interest” tax loophole that lets them pay lower tax rates than kindergarten teachers and truck drivers.[1]
  • Hedge funds are deeply involved in the Puerto Rico debt crisis, buying debt at pennies on the dollar and demanding huge payoffs through harsh austerity measures for working and retired Puerto Rican families and seniors.[2]
  • And hedge fund lobbyists have worked in Washington against the interests of working Americans, seniors and retirees – all to make their billionaire clients richer and richer.[3]

As the candidates debate in Boulder this week, it’s important for the public to understand the huge role of hedge funds in backing GOP candidates:

  • Jeb Bush has taken money from numerous hedge fund managers — and while he’d pare back the carried interest loophole, he’s offering new and expanded tax breaks to billionaires.[4]
  • Marco Rubio raised money from hedge fund vulture investors in Puerto Rican bonds,[5] and then came out against fair bankruptcy protections for Puerto Rico.[6]
  • Ted Cruz’ Super PAC took a monster $11 million donation from a single hedge fund billionaire.[7]

Collectively, hedge funds have poured millions of dollars into top-tier GOP presidential candidates’ campaign committees and Super PACs:[8] cash that ensures the protection of special benefits like the carried interest loophole, or new tax and regulatory benefits.

Next month, Hedge Clippers will publish a full compendium of hedge fund campaign cash to Washington politicians and candidates for president. But in honor of this week’s debate, we wanted to provide a scorecard of hedge fund backing for the major GOP candidates on the stage Wednesday in Boulder.

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