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 A Reuters analysis of the financial disclosures of the 12
Republicans left in the race to be the party’s candidate in the
November presidential election shows that funds run by Goldman have
been a favorite investment destination for them.
It shows that the Republican candidates and their spouses
collectively held 57 Goldman investments, that is more than double
the 28 they had from the second most popular source, Vanguard Group,
which is one of the world's largest investment management firms.
For a graphic of the Goldman and Vanguard investments by the
candidates and their spouses, see http://tmsnrt.rs/23cVSNJ
Last week, the New York Times reported that Cruz, whose wife Heidi
Cruz is on leave from her job as a managing director at Goldman’s
wealth management arm, had borrowed as much as $500,000 from Goldman
to help him in his successful campaign for a Senate seat in 2012 and
didn't disclose it in campaign finance reports.
 Cruz, who is currently second to Donald Trump in a Reuters/Ipsos
poll of Republican voters and is ahead in polls for the Iowa caucus
on Feb. 1, has paid back the loan in full. Cruz told reporters last
week that the loan didn’t violate any campaign financing rules, and
if his disclosure to the Federal Election Commission wasn’t complete
then it was a technical and inadvertent error and he would offer to
amend the filing.
Eight of the Republican presidential hopefuls, Trump, Cruz, Ben
Carson, Jeb Bush, John Kasich, Carly Fiorina, Chris Christie, and
Jim Gilmore said in financial disclosures that were largely filed
between June and August last year that they had owned Goldman funds
or Goldman stock, and in some cases both. The disclosures mostly
cover the period from the beginning of 2014 to the middle of last
year.
Reuters was unable to determine if they still own the funds.
There is no indication that there is anything improper about the way
the candidates came to invest with Goldman.
Goldman declined to comment on the Reuters analysis.
It's not clear from the candidates' financial disclosures whether
Goldman is managing anyone's portfolio or whether the aspirants
simply bought Goldman products on their own. Goldman also declined
to discuss how the candidates came to own the funds, other than to
point out that most of them are available through other firms as
well as through Goldman.
Spokespeople for Cruz and Bush declined to comment. Representatives
for the other six candidates owning Goldman products did not respond
to requests for comment.
Four candidates, Marco Rubio, Mike Huckabee, Rand Paul, and Rick
Santorum had no Goldman funds, according to their financial
disclosures last year.
 REVOLVING DOOR
The popularity of the Goldman funds shows that the candidates are
prepared to trust Goldman to manage their money even as some of them
have criticized the investment bank for having too much influence in
Washington. Cruz told Bloomberg earlier this year, for example, that
Goldman got “special favors” from government.
Senator Bernie Sanders, who is fighting Hillary Clinton for the
Democratic nomination, said last Friday that it is time to “shut the
revolving door” between Goldman and the government that has seen
many senior former Goldman officials end up in top federal jobs in
Washington.
He made the statement the day after Goldman had agreed to pay more
than $5 billion to settle claims from the federal government, New
York and Illinois states, and other agencies, that it misled
mortgage bond investors during the financial crisis.
Goldman declined to comment on the criticism from Cruz and Sanders.
Sanders didn't own any Goldman funds, based on his filings.
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It is unclear precisely how much the candidates owned in each fund
as the disclosures only provide wide ranges for asset values, for
example from $1,001 to $15,000 or $1,000,001 to$5,000,000. In many
cases, there is no indication about when they acquired the funds or
whether they held onto them, though a small number of the
investments are marked as sold in the disclosure forms.
MORE EXOTIC CHOICES
Three Republican candidates in particular have owned multiple
Goldman funds: former Hewlett-Packard Co <HPQ.N> <HPE.N> CEO Fiorina
and her husband Frank owned 21, New Jersey Governor Chris Christie
and his wife Mary Pat held 14, while Ted and Heidi Cruz also had 14.
Family connections and other close links may have played a role in
the investments, which are mainly managed by the firm’s Goldman
Sachs Asset Management arm.
Heidi Cruz began working for Goldman in 2005, and was most recently
a managing director of private wealth management for the firm in
Houston.
Carly Fiorina may not have such a close family connection to Wall
Street but she does have long-term ties with Goldman. The firm was
Hewlett-Packard's financial advisor for its brutal and ultimately
successful struggle to buy rival PC company Compaq in 2002 when
Fiorina was HP's CEO.
And Christie’s wife, Mary Pat, worked on Wall Street as a managing
director at alternative asset manager Angelo, Gordon & Co until
leaving her job last year.
Many of the funds that the Republican candidates have invested in at
Goldman, Vanguard and other fund companies are plain vanilla U.S.
stock and fixed-income funds available to other investors.
Some have made more exotic choices.
Ted and Heidi Cruz, for example, owned several high-yield funds, an
Asian equity fund, an investment in Goldman Sachs shares, and what
appears to be an emerging markets debt fund. Many of the funds have
lost value in the past year in line with the recent plunge in the
value of stocks and many other financial assets.
Fiorina owned a group of private equity and specialist investment
funds that are usually only available to high net-worth individuals
or institutional investors. They included: private equity funds that
sponsor the leveraged buyout of companies, mezzanine funds that lend
to companies, with some specializing in companies in financial
distress, and specialized real estate funds.
For some of the candidates, the funds are only a small part of their
overall wealth – Trump, for example, has his real estate empire and
owned many individual stocks, and Fiorina also owned a large
portfolio of stocks.
The second most popular firm, Vanguard, is best known for providing
low-fee index funds that match market moves, and their funds are
particularly popular with mom-and-pop investors across the country,
with little of the controversy that critics of Wall Street would see
in a Goldman relationship.
(Reporting by Luciana Lopez and Grant Smith in New York; Editing by
Martin Howell)
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reserved.]
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