America’s Richest Gamblers Benefit from Economic and Political Inequality

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America’s best-paid hedge fund managers are also some of its biggest political donors, according to Public Campaign analysis of data from the Center for Responsive Politics. The New York Times coverage of the list of hedge fund managers who reaped the biggest rewards last year noted it wasn’t even a good year for hedge funds, but these top managers still earned billions through fees, gains on their own capital, and risky wagers on airlines, health care companies and other stocks. They have also realized making “mere” hundred thousand dollar bets on politicians has a high rate of return, too. The political giving of the industry and its biggest earners in particular are simple reminders of how easily our politics is dominated by rich gamblers.

Over the last decade, campaign money from the hedge fund industry has boomed, peaking in the 2012 cycle at over $40 million, mostly through outside spending.

Hedge Fund Graph

Source: Center for Responsive Politics, Contribution Trend from 1990 to 2014 Cycle

The eleven managers who ranked in the top ten among well-paid hedge fund managers collectively gave over $18 million in federal contributions (including giving to super PACs) over the last decade, with some participating more avidly than others.

Here are just a few examples:

•    “Quant King” James Simons topped our list of donors to federal campaigns, with more than $10 million since 2003, mostly spent on super PACs that supported Democrats in the 2012 cycle.
•    Next on our list was Ken Griffin, who famously said the rich have “insufficient influence” on politics and policy. I wonder if he’s read the recent work of Gilens and Page.
•    Paul Tudor Jones II prefers to spend more on state elections, particularly in Florida where he owns property and has given heavily to both the Florida Republican and Democratic parties (despite Greenwich, CT being his primary).
•    Steven Cohen of SAC Capital Advisors is a moderate spender amongst his peers, investing less than $400,000 on federal and state elections over the last ten years. In April, his hedge fund settled with the federal government for $1.8 billion and pled guilty to playing a central role in one of the biggest insider trading schemes in history.

Four of these managers (Simons, Griffin, Paulson and Loeb) are the most likely to be boosted by the recent Supreme Court decision in McCutcheon v. FEC that invalidated aggregate contribution limits. The four men got near or exceeded the 2012 aggregate limit.