Bill Ackman‘s Pershing Square Capital Management might need to return millions in fees due to a lousy $500 donation to a political campaign. The donation was made by an employee to a family friend’s campaign campaign.
The issue here centers on Federal regulations which prohibit a financial firm like Pershing Square, or its employees, from making donations to political campaigns without disclosing them. In 2013, Paul Hilal, who was an analyst at the time with the firm, made a $500 donation to the campaign of Juliette Kayyem who was a candidate governor in Massachusetts. The firm later earned money managing the Massachusetts state pension fund.
Will you offer us a hand? Every gift, regardless of size, fuels our future.
Your critical contribution enables us to maintain our independence from shareholders or wealthy owners, allowing us to keep up reporting without bias. It means we can continue to make Jewish Business News available to everyone.
You can support us for as little as $1 via PayPal at email@example.com.
The total amount that may need to be refunded has not been specified, but reports put it in the millions.
This may seem like such a big deal about nothing, such a little bit of money donated to a campaign that never even got off the ground, but the regulations are there for a reason. Pershing Square was required by law to disclose this donation in order to ensure that there be no improprieties, conflicts of interest or even the hint of a possible bribe having been made when seeking government related accounts.
Here’s why Bill Ackman’s hedge fund may have to return millions in fees https://t.co/B8Kba03egd
— FORTUNE (@FortuneMagazine) November 30, 2016
This is why Bill Ackman’s Pershing Square sent an application to the SEC in September asking for an exemption in this case.
“A former employee made a $500 campaign contribution to his friend’s sister’s unsuccessful primary campaign in an unintended violation of our compliance policies, ” Pershing said in its statement. “The donation was $350 in excess of the allowable contribution. The donation has since been returned.”
“Causing (Pershing Square Capital Management) to forfeit compensation for the two-year period subsequent to the contribution could result in a financial loss that is thousands of times the amount of the contribution, ” the firm wrote in its SEC application.
Bill Ackman really needs the SEC to accept Pershing Capital’s request for the exemption. His firm has been in trouble over the last few years, losing a small fortune on bad bets like the shorting of Herbalife stock. Being required to refund the money here and the general bad press that will come along with it could sink Pershing Square Capital.