Top Lib Dem donor short-selling bank shares

by Stephen Tall on January 28, 2009

Late last week, there was a small flurry of media interest in hedge fund Lansdowne Partners:

A hedge fund run by two Tory donors made a £12million killing in days by exploiting the collapse of Barclays shares, it was revealed yesterday. Financiers Paul Ruddock and David Craigen have donated more than £300,000 to the party, most of it since David Cameron became leader. Within hours of the ban on the controversial practice of short-selling being lifted last Friday, their company Lansdowne Partners sold shares in Barclays worth £28.4million. They were bought back on Wednesday, by which time the bank’s value had nose-dived by almost £1 per share, netting a handsome profit for the financiers’ investors.

LibDem Treasury spokesman Lord Oakeshott was quick to condemn the practise:

Short sellers like Lansdowne make millions betting British banks will go down. The Financial Services Authority shouldn’t let them – and the Tories shouldn’t take their dirty money.”

Strong words and stirring stuff. One problem, not hard to foresee: top Lib Dem donor Paul Marshall of hedge fund Marshall Wace confirmed in front of the Treasury Select Committee yesterday that his firm has made money by short-selling shares in banks. To be fair, the party was quick to note its “clear and unequivocal position” in opposing short-selling: “We do not change our policies and principles in response to the wishes or interests of our donors.”

Still, I don’t suppose it will stop us taking Paul Marshall’s ‘dirty money’ (c) Lord Oakeshott. Nor do I see why it should, either. Fundraising for political parties is difficult enough without declining money obtained perfectly legally.