Billionaire Peterffy Says $1.9 Billion Taxes Support Poor

Thomas Peterffy, the 68-year-old billionaire funding anti-socialism commercials, said he helps the needy by paying his tax bill.

“The rich support the poor primarily via taxes,” he said in an e-mail sent to Bloomberg News by spokeswoman Caitlin Duffy. “I paid $1.9 billion in taxes in my lifetime.”

The Hungarian-born chairman of Greenwich, Connecticut-based Interactive Brokers Group Inc. (IBKR), the world’s largest online broker, advocates voting Republican in his commercial, which began airing last week on Bloomberg TV, CNN and CNBC. Socialism, he says in the ad, is removing Americans’ will to succeed.

“Take away their incentive by badmouthing success and you take away the wealth that helps us take care of the needy,” he says in the ad, which is titled Freedom to Succeed.

Peterffy is worth $7.6 billion, according to the Bloomberg Billionaires Index. He owns 86.3 percent of IBG Holdings, a closely held partnership that controls 88.5 percent of publicly traded Interactive Brokers. He also has collected $3.9 billion in dividends, share sales and carried interest distributions since 2005, according to data compiled by Bloomberg from regulatory filings.

Berkshire School

Peterffy does not have a charitable foundation, preferring to give directly to groups and causes. “My charitable donations go to educational efforts, such as Teach for America, Vanderbilt University, Berkshire School,” he said in the e-mail.

He donated $3 million in IBG equity to Vanderbilt University’s Financial Markets Research Center in 2003. He also is listed on the Berkshire School website as having given more than $20,000, the top category of donors. At least one of Peterffy’s children attended the boarding secondary school in Sheffield, Massachusetts.

Neither Peterffy nor Interactive Brokers is listed by Teach for America as having given $1 million or more in its history. Nine anonymous donors have given seven-figure sums to the group.

Born in Budapest during World War II, Peterffy saw little hope in communist Hungary as a teenager, he says in the commercial. He emigrated to the U.S. in 1965. After learning computer programming in New York and consulting for Wall Street companies, he bought a seat on the American Stock Exchange to trade options in 1976.

Electronic Trading

He automated his operation, and began offering electronic trading services to institutional clients. Two decades later, he began taking orders from retail investors.

In 2007, Peterffy and his minority partners sold 10 percent of the company in an initial public offering and an additional 1.5 percent in a secondary offering four years later. In the first two quarters of 2012, the company generated net income of $585.8 million on sales of $1.36 billion. Under the ownership structure, 88.5 percent of Interactive’s profit goes to Peterffy’s IBG partnership and 11.5 percent to common stock holders, according to filings made to the U.S. Securities and Exchange Commission.

Peterffy has done better than his investors. Since the company’s IPO in 2007, when shares priced at $30.01, Interactive Brokers stock has dropped 47.8 percent while the Standard & Poor’s 500 Index has returned almost 9 percent, according to data compiled by Bloomberg.

Interactive Brokers handles about 10 percent of equity options traded worldwide, executing about 1 million trades a day in 6,500 securities, according to its website. It plans to expand into Brazil by the beginning of next year.

To contact the reporter on this story: Brendan Coffey in Boston at bcoffey10@bloomberg.net

To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net

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