Rishi Sunak took part in controversial US corporate raid case - The Guardian, Theguardian.com

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The hedge fund is one of the City’s best-known “activist” investors, meaning it often tries to use its financial muscle to force firms to change their management or strategy. TCI’s acquisition of its CSX stake , which included shares and financial derivatives that give economic returns similar to shares, was ruled by a US judge to have breached US securities rules, although TCI the successfully appealed against the judgment In the original judgment, the Judge said the financiers had attempted to “seek to defend their secret accumulation of interests in CSX by invoking what they assert is the letter of the law. Much of their position in CSX was in the form of … a type of derivative that gave substantially defenses all of the indicia of stock ownership save the formal legal right to vote the shares. In consequence, they argue, they did not beneficially own the shares. ”

The appeal court also sent part of the case back to the lower court so it could further consider whether the investment in the derivatives had breached any law, but CSX then abandoned its claim. The moves to use the CSX stake to replace the directors were documented in minutes taken to record a meeting in June between advisors to CSX and TCI, which was attended by Sunak, TCI founder Sir Christopher Hohn, and TCI partner Snehal Amin.

The document, sent by the advisors to CSX, stated: “TCI indicated that they fully intend to ‘go to war ‘. When asked what that means they indicated that they would seek to replace the entire board as a means to change management. ” A Treasury spokeswoman said: “ TCI had highlighted failures in corporate governance, safety and performance at CSX and were ultimately successful in convincing shareholders to vote for their board nominees rather than the management’s nominees. ” Following the campaign, CSX shares declined, prompting TCI to sell its stake and take its directors off the board.

TCI did not respond to invitations to comment. Read More