People in the News


Former hedge fund manager protests for ‘Occupy Greenwich’

November 18, 2011   Rob Copeland


In an interview with AR, Daniel J. Barach explains why he turned against his own in the tony hedge fund haven.

 
 
Daniel Barach with his sandwich board.
Photo: Rob Copeland

Occupy Wall Street has picked up an unlikely recruit with close ties to the much-vilified top 1%.

Daniel J. Barach, former portfolio manager of a $157 million hedge fund, has taken the movement's cause to the streets of Greenwich, Conn., the home to such funds as AQR Capital Management and Tudor Investment Corp. This month, Barach has protested by walking along the posh shopping strip Greenwich Avenue clad in a sandwich board that pleads "Stop Tax Breaks for Hedge Fund Managers" in bold red type to protest "economic justice in America."

Barach held forth on what he thinks is inequity in the way hedge fund manager bonuses are taxed. His main complaint: the tax advantage of having a huge portion of managers' incomes treated as capital gains and thereby subject to dramatically lower levies than those on ordinary income.

The Harvard Business School graduate is no stranger to the hedge fund industry. He managed $157 million MLT Capital for more than a decade until 2009. According to his LinkedIn profile, Barach's "nine year audited track record" at MLT "averaged 21.08% gross" from 1999 to 2007. He closed the fund in 2008 amid major redemptions as performance soured. Barach declined to discuss his 2008 performance. In a biography provided for his self-published book, " How to Lose Friends and Irritate People," the back cover of which features a full-page photo of someone giving readers the middle finger, Barach described his strategy as "very long-biased and relatively un-levered."

Barach spoke with AR's Rob Copeland about his new part-time gig as a one-man rally:

AR: You spent many years managing a hedge fund. Why protest now?

Daniel J. Barach: The carried interest law has bothered me for a long time. Recently I've been inspired by the Occupy Wall Street movement, though not everything that was coming out of it. Also, I'm inspired by the fact that we have a huge deficit and a huge debt. The patriotic thing to do is try to reduce that deficit by ending the loophole. I think that if educated on the issue, 80% of the American public would agree.

AR: What made you choose to demonstrate on Greenwich Avenue?

Barach: Greenwich has been formally recognized as the hedge fund capital of the world but I never saw anyone protesting there. I went once and talked to a police officer and he said he didn't understand why no one from Occupy Wall Street was in Greenwich. I asked him is it legal to protest-to walk up and down the sidewalk-and he said absolutely. In fact, he directed me where to park.

AR: What sort of pushback did you get from the populace?

Barach: I got many reactions: More than 25, and less than 100. I got a lot of people who said, "You have to watch out walking around here with that." But almost everyone was extremely positive and supportive of the idea of stopping tax breaks for hedge fund managers.

One person who identified himself as a hedge fund manager said something negative and condescending as he walked away. I invited him to walk back and engage. His arguments didn't make much sense to me and after five to ten minutes of talking he said he had to go, leaving in a huff.

 
  Daniel Barach appears to be following the advice he dispensed in his recently self-published book.

AR: Don't you think it's a bit hypocritical to protest tax policy that you yourself profited from for many years?

Barach: It's not about me. Just because I did not always choose to wear a sandwich board and march along Greenwich Avenue does not condemn me as an evil person.

AR: Was it unfair for you to receive those tax breaks?

Barach: Yes. It's unfair legislation. I don't fault hedge fund managers. I fault our elected officials for allowing this.

AR: Have you gotten any more reaction since taking up this cause?

Barach: My family is not supportive of this at all. Right now I'm a portfolio management consultant and they feel that I will lose clients because what I'm proposing is not in my clients' economic interests. They also feel like should I try to get a job for a hedge fund or an asset manager, it will make me toxic or somehow hurt my ability to get a job with a fund.

AR: But you aren't worried?

Barach: I would hope that [a fund] would focus on my audited track record from 1999-2007, and I would hope they would actually look for people that were willing to take unpopular stances.

Interview has been condensed and edited.

See also:
Occupy Wall Street marches to John Paulson's door
US senator targets hedge funds with tax evasion legislation
Hedgies to Obama: Raise my taxes


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