Hedge Bets on Sully

Posted April 17, 2007 at 6:05pm

As hedge funds step up their investment in Washington, D.C., to tap into a lucrative source of inside information, one major industry player is taking it a step further, plucking a full-time analyst right off Capitol Hill. [IMGCAP(1)]

Michael Sullivan, who served as a senior technology policy adviser to Sen. John Ensign (R-Nev.), started this week with CR Intrinsic Investors, a subsidiary of the powerful fund SAC Capital Advisors.

In just the past few years, with the industry expanding, hedge funds have begun inking deals with lobbyists to gather “political intelligence” — real-time tips about impending action that could move the markets.

It is not yet clear that Sullivan, or “Sully,” as he is commonly known, will fulfill that role for CR Intrinsic. A fund spokesman would only confirm the hire and say that Sullivan will serve as a “policy analyst” at the fund’s Stamford, Conn., headquarters.

But the former Ensign staffer has a reputation as a highly connected and skilled political operative — a solid profile for someone who might be tasked with prying important information from lawmakers and aides before it becomes public. In a farewell e-mail to his colleagues, Sullivan said he would be “working in a variety of sectors including telecom, technology, media, and gaming.”

“I will also continue to come to Washington 2-3 days a week, so the good news is we will keep in touch with all our friends in D.C.,” he added.

Sullivan did not respond to requests for comment.

The extent to which lobbyists are gathering information for hedge funds is difficult to determine — even Jack Gaine, president of the Managed Funds Association, which represents the industry, said he was unsure roughly how many funds have lobbyists on retainer. That’s because under current rules, lobbyists don’t need to disclose the arrangements.

But that could soon change: A spokeswoman for Rep. Brian Baird (D-Wash.) said the lawmaker plans to reintroduce a bill he first floated last year that would require lobbyists to report the activity.

The measure, which was co-written by Rules Chairwoman Louise Slaughter (D-N.Y.) and earned the support of former investment banker and House Democratic Caucus Chairman Rahm Emanuel (Ill.), also would ban the buying or selling of stock based on the insider tips.

Speaking of Hedge Funds … The new Wall Street kingmakers are demonstrating a realization that Washington can hurt as much as it helps. The latest evidence: D.E. Shaw, one of the largest funds, is close to naming a director of external affairs, who will help serve as the firm’s public face in town.

Financial services lobbyists said the fund has cast a wide net downtown in seeking to fill the post, and a source close to the search said a decision will be made in the next few weeks.

The insider said the director will be charged with overseeing government affairs, interactions with trade associations and media relations.

Swapping Firms. Quinn Gillespie & Associates has lost one of its top-paying clients to rival firm BKSH & Associates. The Stand Up for Steel Coalition, which paid Quinn Gillespie $540,000 last year and $600,000 in 2005, has terminated that relationship.

“You hire firms for specific needs and look for specific results and Quinn Gillespie provided very satisfactory results for specific goals during a period of time, but we are turning to other issues and approaches that have made us search out other reliable lobbying organizations,” said Gary Hubbard with the United Steel Workers, a member of Stand Up for Steel.

The coalition’s Scott Salmon, who is director of government relations for U.S. Steel, said that Stand Up for Steel worked with Quinn Gillespie for a number of years, including through a revamp of pension legislation. “We would hire them again if the right project came along,” Salmon said. “Our needs changed.”

Quinn Gillespie’s Rick Powell said that both sides agreed they reached a “positive outcome” in the pension legislation.

BKSH’s Charlie Black said his firm would focus on trade issues for the coalition.

Getting Creative. The star-studded Creative Coalition is coming to town Thursday for a lobbying day. But don’t expect the likes of A-listers George Clooney and Angelina Jolie to be there. The group has dispatched Kerry Washington, who played the role of Ray Charles’ wife in the film “Ray” and plans to testify on arts funding, according to sources familiar with Creative Coalition’s plans.

The entourage of artists is likely to include Wendie Malick of “Just Shoot Me” fame; former “Wings” star Tim Daly; Giancarlo Esposito, whose movie and TV career included a role in “Homicide: Life on the Street”; Frances Fisher, who stars in “Sex and Death 101”; and celebrity stylist Phillip Bloch.

K Street Moves. The Washington Group has added three veteran Democratic political consultants and promoted Rita Lewis to vice chairwoman. It has snagged back John O’Hanlon as managing director and created a joint venture with his Integrated Solutions Group, which also includes Moses Boyd. Gerry Kavanaugh, who served as chief of staff to Sen. Edward Kennedy (D-Mass.), also is partnering with The Washington Group though his firm, KSI Inc.

• The National Association of Manufacturers hired Brian Maloney, who was a legislative analyst at the Department of Health and Human Services’ Centers for Medicare and Medicaid Services, as its new director of health policy.