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Are Billionaire Traders Public Assets?

Mark Gilbert is a Bloomberg View columnist and writes editorials on economics, finance and politics. He was London bureau chief for Bloomberg News and is the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”
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A lawsuit winding its way through the courts provides further evidence, if it were needed, that the very rich are different from you and me. It also suggests that hedge-fund managers (or at least their lawyers) regard themselves as socially useful, a contentious assertion to say the least.

Chris Rokos is suing Brevan Howard, the hedge fund of which he was a founding partner, for restraint of trade. A judge has set Sept. 18 as the date for a pre-trial hearing in Jersey, the offshore financial center in the U.K.'s Channel Islands where the partnership is domiciled. Court documents often make for good spectator sport, and this is no exception.

The numbers are staggering. Brevan Howard has assets of about $37 billion, making it Europe's biggest private hedge fund. Rokos earned about $900 million at the firm he helped start in 2002, and made almost $4 billion for the company -- even after losing $383 million in 2012.

Rokos was already a money-making machine before Brevan Howard. He generated profit of $165 million for Goldman Sachs between January 1995 and December 1997, the court documents show; he then joined Credit Suisse, where he added $55 million in 1999, another $55 million in 2000, and an eye-watering $230 million in 2001. Here's a chart that reproduces his annual profit-and-loss at Brevan Howard, according to a table in the documents:

Rokos is suing Brevan Howard, because the terms of his contract bar him from setting up his own investment fund until April 2019. Those conditions are either "unlawful restrictions of trade, contrary to public policy and are therefore unenforceable," as Rokos contends, or else obligations that he is "seeking to avoid because they no longer fit in with his current wishes, yet he still seeks to retain all financial benefits conferred on him under those agreements," as Brevan Howard counters.

Rokos already runs his own money in what's called a family office, and according to his lawsuit the consequences of not freeing him from his contract are far-reaching:

The public and/or a section of the public will be deprived of the exercise of the Representor's skills and hard work for a period in excess of 5 years. His skills will atrophy. The perception on the part of third parties that his skills have atrophied will increase. The Representor will not be able to build a business, create employment opportunities, generate wealth and share it amongst his workforce for a period in excess of 5 years.

I hope you're thinking what I'm thinking: that an obviously smart guy, who signed a partnership agreement that tied his hands in the event of him quitting is unlikely to win much sympathy from a judge; and that expecting your ex-employer to keep paying you bonuses if you're allowed to set up your own shop verges on delusional.

I'm also thinking that if I had $900 million in the bank (probably now over $1 billion, given his investment record), my appetite for picking a legal fight with one of the world's biggest hedge funds just so I could rent some more desks and build a bigger train set would not be very high. Which I guess is one reason I'll never trouble the billionaire rankings.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Mark Gilbert at magilbert@bloomberg.net

To contact the editor on this story:
Marc Champion at mchampion7@bloomberg.net