| (Photo courtesy of Kristin
Kristin Davis is a fan of hedge funds and not merely because
some managers used to patronize her stable of escorts. Davis,
who counted elite athletes and former Governor Eliott Spitzer
as clients of her profitable prostitution ring, got her start
in the back office of a California hedge fund.
The Anti Prohibition party nominee’s platform
centers on legalizing marijuana,
prostitution, casino gambling and gay marriage, but
she’s also got some concrete policy proposals for
keeping hedge funds in New York.
That comes from nearly a decade working in the hedge fund
industry. Davis started her career at Brookhaven Capital
Management, a now-closed Menlo Park, Calif.-based fund. She
began in 1994 in an administrative position and says she worked
her way up over six years to controller at the age of 25 (a
former Brookhaven executive confirmed her employment, calling
her a "quick learner" and "very entrepreneurial").
Next, Davis did back-office support—regulatory
filings, net asset value calculations, processing
securities—for hedge funds at third-party
administrators Conifer Securities (a spokesman for Conifer
confirmed only that Davis worked at the company from February
2002 to March 2003) and Hemisphere Management, where she says
she was vice president of operations in charge of a staff of 40
in the firm’s Boston office, which could not
immediately be verified.
AR recently asked Davis, who was convicted of
promoting prostitution and served four months on
Riker’s Island, about her hedge fund experience
and how she’d use it as governor.
AR: How would your hedge fund experience help
you to run New York State?
KD: My hedge fund experience most definitely helped prepare me
for everything I've encountered in life. My first employer was
great, but also very tough, which gave me a strong work ethic.
If I was off even a basis point in our monthly accounting, I
had to search through millions of trades—and
dollars—to find the discrepancy.
My boss used to say "under promise, over deliver." I carry that
saying with me now because most people underestimate me because
of the way I look, and I realize it makes it easy to over
deliver since the expectations are low.
I also went through bankruptcy with Brookhaven and worked with
the firm to try and save it, so I understand how to deal with
companies in crisis.
Lastly, I've also worked with portfolio managers whose egos
won't allow them to dump failing stocks or to change their
trading strategy and I understand how pride and ego need to be
taken out of the equation when running a business.
If governor, how would you manage the state pension
system? Would you allocate more to hedge funds?
If elected, I would move the state pension to be directed by a
board of trustees rather than the current system where all
investment decisions are made by the comptroller. Having one
man in charge of billions of dollars invites corruption. I
favor a diversified portfolio with hedge fund products
How would you approach hedge fund
I am opposed to higher levels of taxation. I oppose the stock
transfer tax as well as the New York City tax. The New York
City tax specifically has forced many hedge fund managers to
relocate outside the state to areas like Stamford,
New York City has a separate income tax in addition to New York
State income tax. This can be up to 3.6%, which has driven a
number of hedge funds out of the city (and state) to areas that
don't have this additional tax. I don't think businesses should
be penalized (from a tax perspective) for doing business within
I favor repealing that tax to attract funds to come back to the
city and generate revenues for the state. I also favor cutting
the state corporate tax rate in half to stimulate
economic growth. Lowering the taxes would allow companies to
expand as they will have more capital. This is simple
Are the new SEC/state registration and disclosure rules
I cannot assess the SEC rules right now because I don't think
they are properly being enforced. We need to enforce the rules
we have, and then examine them to see if they are
Should hedge funds be allowed to market
Yes, hedge funds should be allowed to market themselves. Like
any other investment vehicle, hedge funds deserve the same
right to market. Now that hedge funds need to register with the
SEC, they should be allowed to market themselves.
Did clients of your escort service include hedge fund
Yes, my agency had many hedge fund clients. I spoke with a many
of them on the phone when I booked their appointments. I talked
shop with them and a few of them offered me jobs at their
firms. I told them they couldn't afford me.