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Message 11 of 11

The $180 million conflict that kept Scaramucci out of the White House in January has only gotten shadier

Linette Lopez
Business Insider July 24, 2017

(New White House communications director Anthony Scaramucci has joined the Trump administration with a $180 million conflict of interest hanging over his head.AP)
Anthony Scaramucci is selling his fund of funds business to a Chinese conglomerate with ties to the government.
The firm, the HNA Group, is facing an increasing number of questions at home and abroad, and the deal is subject to review by the US Treasury.
The sale reportedly kept Scaramucci out of the White House in January because of the conflicts it raises.
Let's not be naive. If I told you that a firm with ties to a sometimes adversarial foreign power was trying to overpay a Trump administration official for their now struggling business, you might say, "Gee, that seems like a conflict the White House doesn't need right now." But here we are.
New White House communications director Anthony Scaramucci has joined the Trump administration with a $180 million conflict of interest hanging over his head. It's the same conflict that reportedly kept him out of the White House months ago, and it's only gotten stickier since then.
Scaramucci is selling his $5.6 billion financial firm, SkyBridge Capital, to a number of investors. Chief among them is a Chinese financial firm with strong ties to ruling Communist Party, called the HNA Group. Already, Bloomberg outlined that HNA and its fellow investors seem to be paying multiples more for SkyBridge than a firm like this would normally be valued at. But the sale has also been dragging on for months, and as it has we've seen the questions about HNA, its ownership structure, and its financing rise out of the murky world of big Chinese business.
Now, this all sounds pretty strange as is. But it gets even stranger when you understand what SkyBridge is, what HNA is, and what's been holding up the sale and Scaramucci's pay day. (Hint: It's the US government.)
When you understand that, you'll also understand why this sale to the Chinese was the reason why White House Chief of Staff Reince Priebus didn't want Scaramucci too close to the president, according to some close to the administration. It's also why Priebus was cut out of the loop during Scaramucci's lightning fast hiring last week.
But first, SkyBridge. Scaramucci's firm is likely best known for the massive bash it throws in Vegas every year, one that attracts world leaders and stars of the world of finance for four days in the desert.
But of course that's not the only business SkyBridge has. It is a fund of funds, which is to say that it is an investment fund that connects people to other investment funds.
Over the last few years, businesses like this have been hurting on Wall Street. When you pay a fund of funds, you pay a fee to them, and a fee to the hedge fund they're connecting you to. The problem with that, of course, is that it's expensive, and when hedge funds aren't performing (as they haven't been for the past couple of years) no one wants to pay high fees.
Scaramucci told me in an interview last year that part of his job was to try to get fund managers to lower their fees so that he could lower fees for his clients. Unfortunately, though, his efforts weren't enough to stop investors from pulling $1.6 billion from SkyBridge's flagship fund last fiscal year.
This is part of what makes it so curious that HNA would want to overpay for SkyBridge. It is a high-fee business in a low-fee world. Scaramucci and SkyBridge have been responding to questions about the sale the same way for months — they say it's a couple of weeks away from closing. He has also said repeatedly that he'd recuse himself from the sale of SkyBridge, and that he thinks HNA is buying it in spite of his ties to Trump, not because of them.

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