A Former Goldman Sachs/Hedge Fund Guy Is the New U.K. Prime Minister

Gunnar Larson g at xny.io
Tue Oct 25 09:09:50 PDT 2022


The newly installed U.K. Prime Minister, Rishi Sunak, (the third PM in
seven weeks) has scrubbed his Goldman Sachs and hedge fund career from his
LinkedIn profile and from his official government bio. But, unfortunately
for Sunak, those careers have been assiduously chronicled in countless
newspaper articles for more than a decade – and not in a good way.

Sunak worked as a junior analyst at Goldman Sachs from 2001 to 2004, where
part of his research involved railways. He left Goldman to obtain his MBA
at Stanford University, following which he joined TCI hedge fund in 2006 as
a partner and worked there until 2009, when he left to co-found the hedge
fund, Theleme Partners with Patrick Degorce. Sunak worked at Theleme
Partners until 2014, when he moved into conservative politics in the U.K.
That’s a total of 13 years involvement in financial markets that Sunak
wants to obliterate from his work history.

Those 13 years in finance include a number of controversial events. Chief
among them was Sunak’s direct involvement in activism against the board of
the U.S. rail freight operator, CSX. The TCI hedge fund had secretly
acquired a large stake in CSX along with another hedge fund, 3G Capital
Partners, through the purchase of shares as well as total return equity
swaps, a form of opaque derivatives that can be used to disguise a large
share stake. (That same type of derivative was used by Archegos Capital
Management last year to disguise its giant stake in ViacomCBS and other
companies, blow itself up, and leave mega global banks nursing margin loan
losses of more than $10 billion.)

CSX was highly displeased with the hedge funds’ sneaky activism and took
the matter to federal court. The District Court for the Southern District
of New York wrote that TCI had sought “to defend their secret accumulation
of interests in CSX by invoking what they assert is the letter of the law.
Much of their position in CSX was in the form of… a type of derivative that
gave defendants substantially all of the indicia of stock ownership save
the formal legal right to vote the shares. In consequence, they argue, they
did not beneficially own the shares.”

The case was appealed to the Second Circuit and TCI was allowed to elect
four directors to the CSX Board. Shareholders, however, headed to the
exits, sending the stock price down dramatically and delivering large
losses to the hedge funds involved. TCI sold its stake and removed its
representation from the board. A CSX shareholder, Deborah Donoghue, sued
TCI and 3G Capital Partners. That case was settled by TCI with a payment of
$10 million to CSX and the payment of legal fees to plaintiff’s attorneys.

Sunak is married to Akshata Murty, the daughter of Indian billionaire
Narayana Murthy, who is co-founder of the IT company Infosys. Management of
her wealth has also cast a negative light on the couple. It was revealed
earlier this year that she had saved millions of dollars a year in taxes on
the dividends she received from her shares in Infosys by claiming
“non-domiciled” status. The withering publicity forced Murty to say she
would pay taxes in Britain on her overseas income. The couples’ combined
wealth is estimated at approximately $800 million.

Related Article:

January 23, 2020: Goldman Sachs: The Vampire Squid’s Alum Control Two Fed
Banks, the U.S. Treasury, the European Central Bank and the Bank of England
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