Jan. 17 (Bloomberg) -- R. Hunter Biden, a Washington lobbyist and son of U.S. presidential candidate Senator Joseph Biden, stepped down from daily management of Paradigm Global Advisors LLC, which he owns with his uncle, James Biden.

Paradigm, a New York-based firm that has invested $500 million of its clients' money in hedge funds, named Charles Provini, 60, president. Biden, 36, took over as interim chief executive officer in May before buying a majority stake with James Biden, 57, the brother of the Democratic senator from Delaware.

Biden, founder and partner of Washington-based Oldaker, Biden & Belair LLP, said in an interview that he will remain with the law and lobbying firm while helping to oversee Paradigm as chairman of its advisory board. His dual role in politics and hedge funds is unusual in the $1.3 trillion industry, which is dominated by former Wall Street insiders.

``There was a need for someone to fill the role of leadership,'' Biden, said of his decision to serve as Paradigm's CEO until a new manager was found. He said his uncle suggested in February that they consider buying the firm. No other Biden family members are involved in the venture, he said.

Paradigm will work to attract more institutional investors, using its proprietary system for choosing hedge-fund managers for clients as a lure, he said. The firm is what's known as a hedge fund of funds. It allocates customers' money to outside managers who pursue a range of investment strategies including stocks, bonds and commodities.

``As an owner, I would hope I would be as helpful as possible to Chuck and the company in making the company successful,'' Biden said.

Management Changes

Paradigm has made several management changes, according to a letter sent to clients today. Markus Karr, formerly a managing director, was named chief investment officer, replacing founder James Park, who remains a consultant. Ron Wilhelm, chief compliance officer, added the title of chief operating officer, the letter said.

Biden wouldn't say how much he and his uncle paid for Paradigm, which Park started in 1991. James Biden, who declined to comment, is not involved in management of the firm, Hunter Biden said. Biden and Provini declined to disclose information about returns on the firm's investments.

Oldaker, Biden & Belair earned $1.76 million in lobbying revenue in the first half of 2006, according to Congressional Quarterly's PoliticalMoneyLine. The firm's biggest clients include the National Association of Shareholder & Consumer Attorneys, a Washington-based group representing law firms specializing in investment and corporate law.

Lobbying Clients

Biden was registered to lobby on behalf of 17 entities in 2006 including Catholic colleges Saint Joseph's University in Philadelphia, Xavier University in Cincinnati and University of Detroit Mercy, according to federal disclosure records. Biden said he has no plans to encourage his university clients to invest in Paradigm.

Biden, a graduate of Yale Law School in New Haven, Connecticut, said he's never lobbied on behalf of hedge funds and doesn't intend to. He also said he doesn't plan to participate in political discussions about hedge-fund regulation.

``I don't plan on being involved in any way on Capitol Hill advocating one way or another on regulations that may be imposed or not imposed on the industry,'' Biden said.

Disclosure of politicians' connections to the hedge-fund industry has become more important to average investors and regulators as the hedge funds' clout has increased, said Michael Feiner, professor of management and business ethics at Columbia University's Graduate School of Business in New York.

Greater Scrutiny

``The lobbyist overlap is unusual, and that kind of stuff needs to be reported,'' Feiner said in an interview. ``It's that people question whether there's a pure separation as Congress talks about greater scrutiny of hedge funds.''

Hedge funds are largely unregistered pools of capital that cater to wealthy individuals and institutions such as pension funds and endowments. Fund managers aim to make money regardless of the direction of financial markets, and usually charge a fee of 2 percent of assets and take 20 percent of trading profits.

Former government leaders including ex-U.S. Treasury secretaries John Snow and Lawrence Summers have joined hedge funds in recent years. Chelsea Clinton, daughter of Senator Hillary Rodham Clinton and the former president, last year joined New York-based hedge- fund manager Avenue Capital Group as an analyst.

Hedge-Fund Oversight

Senator Biden's office did not return a call seeking comment.

Joe Biden, 64, is chairman of the Senate Foreign Relations Committee and a member of the Senate Judiciary Committee. The judiciary committee in the past year has held hearings on SEC oversight of hedge funds and so-called naked short-selling, or the practice by some hedge-fund managers of selling shares in companies they don't own.

The senator's oldest son, Democrat Joseph ``Beau'' Biden, 37, is the attorney general of Delaware and a former federal prosecutor in Philadelphia.

Hunter Biden said he and his father have not discussed details of his Paradigm management role or ownership.

Provini was previously chairman of C.R. Provini & Co. Inc., a financial-services firm started in 1991, and president of New York-based Ladenburg Thalmann Asset Management.

To contact the reporters on this story: Jenny Strasburg in New York at jstrasburg@bloomberg.net; Jesse Westbrook in Washington at jwestbrook1@bloomberg.net.

Last Updated: January 17, 2007 13:23 EST