Posted: October 20, 2022
In case you missed it, The Daily Beast wrote a story exposing how Michael Bennet's own investments contradict his calls for greater transparency in Washington, especially when it comes to how lawmakers manage their investments. Read the full story here. See the highlights below:
On Bennet's Ties to "Vulture" Funds
According to Bennet’s most recent financial disclosure, the Democrat is worth between $7 million and about $31.2 million. He keeps millions of it in entities connected to two notorious offshore tax havens, with one of those entities being a “vulture fund” that invested in junk bonds of Puerto Rican debt.On Vulture Funds Enriching Bennet
The Puerto Rican debt crisis has dragged on for more than seven years. But in its early stages, the risk of default sparked a feeding frenzy for “vulture funds” who swooped in to buy up billions of dollars in cheap government bonds, bet against the island, and made off with massive profits when bankruptcy struck three years later.Bennet appears to have profited. According to his 2017 financial disclosure, one of his hedge fund investments—which is tied in businessand court filings to Puerto Rican debt claims—yielded between $100,000 and $1 million in income that year. The fund had never returned more than $1,000 annually on his reports dating back to the initial purchase, in 2014.Today, Bennet’s original investment is worth between $1 million and $5 million, financial records show. Last year, he clocked between $15,000 and $50,000 from the fund. (Financial disclosures only provide dollar amounts in increasingly wide ranges.)On Bennet Profiting From Puerto Rico's Collapse
Andrew Morriss, international finance expert and professor of law at Texas A&M University, told The Daily Beast it appeared that Bennet profited from Puerto Rico’s collapse. “Sounds like they were anticipating the bonds would drop, and had a strategy to capitalize when the price fell, and made quite a bit of money off of that,” Morriss said of the hedge fund involved. “They made the correct bet on the Puerto Rican bonds, which is a bet against Puerto Rico. They accumulated stuff and waited for something bad to happen. And when it did, the fund made a whole bunch of money. ”Morriss added this strategy was a standard thing in financial markets, “but it certainly doesn’t look good if you’re a man of the people to be involved in these kinds of strategies. ”In July 2014, Bennet put between $500,000 and $1 million into a hedge fund called Canyon Capital Balanced Fund LP, according to his financial disclosure report. That fund is run by Canyon Capital Advisors, a major wealth manager that jumped on Puerto Rico’s junk bond offering about three months before Bennet’s investment. The specific fund Bennet invested in was a “feeder” fund for an even bigger, “master” fund run by the same group, but stationed in the Cayman Islands. That master fund—Canyon Balanced Master Fund LTD—pools money from investors all over the world, and performs the actual trades. It’s also listed alongside Canyon Capital Advisors in Puerto Rico bankruptcy court records. On Vulture Funds in Puerto Rico
But despite Puerto Rico’s faults, it had a nudge—from investors looking to capitalize on the moment. “Wall Street kept pushing the Puerto Rican government’s loans even as the island teetered on default, with a zeal that bank insiders are now describing with words like ‘unethical’ and ‘immoral,’” NPR reported in a 2018 retrospective on the crisis. Cue the “vulture funds.” Sensing the impending crash, hedge funds and other entities scooped up a combined $3 billion in debt in March 2014, which the government was selling as a lifeline. Some of those investors “shorted” the debt. Congress, with Bennet’s vote, created an oversight board in 2016 to help restructure the debt—$70 billion in public debt, and another $50 billion in pension liabilities. The following year, Puerto Rico declared bankruptcy—and the investors behind Bennet’s fund made money. All told, Canyon Capital Advisers claimed north of $680,000,000 in debt holdings. Since then, Bennet has banked between $230,000 and $1.3 million from his Canyon Balanced Fund, according to his annual disclosures. It returned nothing more than $1,000 a year until bankruptcy, and the hurricane, struck. Learn more about Joe O’Dea’s campaign here.
Original source can be found here.
