Corzine invests in hedge fund with stake in regulated utilities

A hedge fund Gov. Jon Corzine invests in has a financial stake in two companies that are regulated by the state, public records show.

Corzine has a stake of less than one percent in TPG-Axon, which holds $26.6 million of stock in Comcast.  The company, which has 1.3 million subscribers, is the largest cable provider in the state.  The fund also has $25.8 million of stock in Time Warner Cable, which has a small share of the New Jersey market, with 54,000 subscribers in Bergen and Hudson Counties. 

Cable television companies are regulated by the Board of Public Utilities, whose members are appointed by the governor.

Corzine's investment with TPG-Axon has become a political headache for his campaign, as Republicans have used it to tie him to casino investments made by Texas Pacific Group (TPG), which shares a founder with TPG-Axon.  Spokesmen from both TPG and TPG-Axon told newspapers this week that the two companies are separately run, although Republicans pointed to shared corporate addresses and several business publications that drew a connection between the two. 

No such separation exists in this case, since TPG-Axon itself made the investments sometime between March 30 and June 30 of this year.  Corzine has not disclosed the exact size of his investment in the hedge fund, but a one percent share would equate to about $260,000 in Comcast stock - a small amount relative to Corzine's personal wealth. 

Corzine aides argue that investors would be hard pressed to find major companies that are not regulated by the state in one way or another.  He is one of 250 passive investors in the hedge fund, meaning he does not dictate the investment decisions of its manager, Dinakhar Singh.  And the two cable companies, at about $50 million combined, make up barely more than one half of one percent of the $9 billion fund.  A one percent investment in that fund would be worth about $90 million.

"Governor Corzine has no input or control over the investments TPG-Axon has made," said Sean Darcy, a spokesman for the campaign. "Factually, he has no discretion over the fund's investments." 

Still, despite its small size, the investment creates at least the appearance of conflict, according Seton Hall University political science professor Joseph Marbach.

"It points to a larger issue that I think the Governor has to explain: why does he insist on managing his portfolio when nearly every other politician in that situation would have turned it over to a blind trust?" he said.

State Sen. Joseph Kyrillos (R-Middletown), the chairman of Republican Christopher Christie's gubernatorial campaign, says that Corzine's personal investments are full of potential conflicts and says the governor should end his relationship with the hedge fund.

"If Jon Corzine needed another reason why he should divest his funds with TPG-Axon, he has one in what appears to be just the latest in a series of disturbing conflicts of interest," Kyrillos said." The financial entanglements continue to deepen and questions continue to mount as Governor Corzine faces not just a problem with his casino partnership, but has a partial ownership in the very industry his own appointees are tasked with regulating."