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Rishi Sunak faces questions over whether he exaggerated his work at hedge funds in the City

Sunak's time at The Children's Investment fund has led to questions about his role at the company.

Rishi Sunak is facing questions about whether he exaggerated his work at hedge funds during his career outside politics, as his record comes under scrutiny.

The former Chancellor has championed his business career as an example of his success outside of politics, and why he should become the next Prime Minister.

Following a stint at Goldman Sachs as an analyst, Sunak joined The Children’s Investment Fund (TCI fund) a multibillion-pound hedge fund on the company’s Investment and Business team.

Mr Sunak has since discussed his role at TCI in interviews, telling the BBC in 2019 that he didn’t know how much he lost in a single day during the financial crisis but that “it was a lot”.

Mr Sunak said: “It was stressful. You know, with that scale of loss financially that I have responsibility for, you are responsible for people’s savings and when that’s all kind of evaporating in front of your eyes that’s quite a stressful thing to live through as an individual going through it… you are highly accountable – that’s what I like about, it’s very directly accountable – you’re responsible for your investments and either they are good or they are bad, things work out or they don’t — there’s nobody else to blame, there’s nowhere to hide.”

However, according to Mr Sunak’s regulatory filings while at the TCI fund, he would have been unable to handle investments or customer money during his time at the firm.

Liz Truss and Rushi Sunak at TalkTV's Ealing Studios, west London, for The Sun's Showdown: The Fight for No10, the latest head-to-head debate for the Conservative Party leader candidates. Picture date: Tuesday July 26, 2022. PA Photo. See PA story POLITICS Tories. Photo credit should read: Dominic Lipinski/PA Wire
Liz Truss and Rushi Sunak at TalkTV’s Ealing Studios, west London, for The Sun’s Showdown: The Fight for No10. (Credit: Dominic Lipinski/PA Wire)

A source in the Financial Conduct Authority (FCA), the UK’s financial regulatory body, confirmed that Mr Sunak wouldn’t have been able to directly complete any investments or deal with clients, but the approval he did have as a junior partner would have seen him work with and contribute to those who could.

According to FCA records, Mr Sunak only had regulatory approval as a partner. A majority of the Investment and Business team were listed as partners, indicating that Sunak did not hold a particularly senior position.

The former chancellor was the only partner not to hold FCA approval to advise customers, according to analysis of a 2008 TCI London staff list.

Mr Sunak was also one of three partners at the firm who were not approved as investment advisors, and he was also not approved as an investment manager, unlike senior partners at the firm.

The former chancellor had the fewest FCA approvals of any partner at TCI London at the time, according to public records.

A financial expert said that Mr Sunak’s characterisation of his work embellished his role at the firm.

“With the approvals he has, he wouldn’t have been able to work in the ways he claimed. He had a respectable career in the City, but he was never front and centre,” he said.

Dr Devraj Basu, a senior lecturer in accounting and finance at Strathclyde University, said the structure suggested that Mr Sunak had no role in investment management.

Dr Basu said: “Hedge funds are typically structured as a limited partnership and a separate investment management company that does the actual investment.

“The roles in the FCA filing would reflect that. So Mr Sunak’s role as a partner alone suggests he was involved only with the limited partnership and not the actual investment management company.”

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Mr Sunak was 26 when he joined TCI in 2006 as a junior partner, and left in 2009 when he was nearly 30 to join a hedge-fund he co-founded called Theleme Partners with colleague Patrick Degorce. Mr Sunak left Theleme and the City altogether in 2014, upon selection as the Conservative candidacy in Richmond.

In a legal case in 2008, Mr Sunak’s firm referred to his lack of experience in court evidence to mitigate claims from a company in dispute with TCI.

In response to an email from Mr Sunak to CSX, a rail freight company of which TCI was an investor, Mr Sunak claimed TCI had “$100m of stock”, which CSX claimed was evidence that Mr Sunak’s firm was attempting to hide the amount of shares his company had bought in CSX.

In evidence filed in response, TCI said that “Rishi Sunak graduated from business school not long before performing research on the rail industry for TCI. When he emailed CSX on October 23, 2006, and stated that TCI had “$100m of stock,” he did not understand the true nature of TCI’s investment. In reality, TCI was accumulating a swap position in CSX.”

Mr Sunak was approached for comment multiple times.

A spokesperson for the Financial Conduct Authority declined to comment. TCI was approached for comment.

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