Hedge Fund Led By GOP Senate Candidate Shed Hundreds Of Jobs After Pocketing State Money

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Dave McCormick, an extremely wealthy hedge fund manager running as a Republican for U.S. Senate in Pennsylvania, has built much of his political persona around his record of creating jobs.

During his run for Senate last cycle, McCormick cited both his tenure as CEO of online auction startup FreeMarkets in the early 2000s and leading the hedge fund Bridgewater Associates from 2017 to 2022 as evidence of his job-creating credentials.

“I was a leader of a company with my colleagues that created 600 jobs in Pittsburgh,” he said in a Fox News interview in May 2022. “I then went on to run another global company. I know what it takes to create jobs.”

McCormick’s claims about his work at FreeMarkets have already wilted under scrutiny. As a candidate in 2022, McCormick initially said he had created 1,000 jobs in Pittsburgh, when in fact his failure to generate that amount led to the partial withdrawal of a Pennsylvania state grant premised on hitting that marker.

But McCormick’s more recent work at the helm of Bridgewater, a company based in Connecticut that is the world’s largest hedge fund, paints his record as a job creator in an even less flattering light and could become a potent campaign talking point for incumbent Sen. Bob Casey, McCormick’s all-but-certain Democratic opponent. McCormick, a highly touted GOP recruit, is key to his party’s plans to retake the Senate in 2024.

McCormick presided over a 400-plus person reduction at Bridgewater, despite the company receiving a $52 million subsidy package from Connecticut’s Department of Economic and Community Development in 2016 as part of the state’s First Five Plus initiative, according to the Connecticut Mirror. After exiting the agreement in March last year, CT Insider reported that Bridgewater was able to keep the vast majority of the grants, loans and tax credits it received, provided that it remained in the state until May 2026.

“David McCormick’s only accomplishments as a hedge fund executive were to lay off workers, outsource American jobs, and sell out to China,” Maddy McDaniel, a spokesperson for the Pennsylvania Democratic Party, said in a statement to HuffPost. “Now, he’s pretending he was a successful business leader and job creator, but just like the rest of his campaign, that’s a blatant lie.”

Elizabeth Gregory, a spokesperson for McCormick’s campaign, noted in a statement to HuffPost that Bridgewater grew by 50% from 2009 – when McCormick became president of the firm, but before he became CEO – to 2022. When he entered as president, the company had 800 employees; at his departure, it had about 1,200.

“Dave is a proven job creator,” Gregory said. “Dave also created hundreds of jobs in the greater Pittsburgh area while at FreeMarkets, helping to take the company from a little over a hundred jobs when he joined in 1999 to nearly 900 by the time he sold the company as CEO at the end of 2004.”

Dave McCormick lost the Republican U.S. Senate primary in Pennsylvania in 2022. This time though, he's the party-backed, prohibitive favorite to take on Sen. Bob Casey (D-Pa.).
Dave McCormick lost the Republican U.S. Senate primary in Pennsylvania in 2022. This time though, he’s the party-backed, prohibitive favorite to take on Sen. Bob Casey (D-Pa.).

via Associated Press

Connecticut’s First Five Plus initiative entitles Connecticut-based companies to loans, grants, tax credits and other forms of aid if they commit to either creating 200 full-time jobs within two years or investing $25 million and creating 200 full-time jobs within five years.

Bridgewater’s promises to Connecticut were even loftier.

In exchange for retaining 1,400 jobs and creating another 750 jobs, First Five Plus provided Bridgewater with $22 million in loans and grants in May 2016. The principal of the 10-year, $17 million loan would not need to be repaid in the first five years, and interest was just 1% per year. The state also provided $5 million in grants that would never have to be repaid. In addition, Bridgewater’s plans entitled it to $30 million in tax credits.

However, over the course of McCormick’s five years as co-CEO (and later, sole CEO) of Bridgewater, the company’s workforce shrank. Bridgewater’s workforce declined from 1,702 people in 2017 (according to data collected by the state government of Connecticut) to 1,264 people by the end of 2021 (according to data that Bridgewater provided to the U.S. Equal Employment Opportunity Commission).

The reductions in staff size came mainly from two changes that McCormick implemented, first as co-CEO in 2019 and again as sole CEO in 2020. Despite reporting high returns for its flagship fund in 2019, Bridgewater outsourced nearly 200 jobs in its finance, human resources and recruiting departments to the consulting firm Genpact. Outsourcing invariably allows companies to employ people at a lower cost, often because the personnel firms with whom they contract provide lower pay and fewer benefits.

In the summer of 2020, following losses at its flagship fund, McCormick laid off about 200 people, according to the Wall Street Journal. When the layoffs began in July, people close to Bridgewater characterized the changes to the Journal as McCormick “putting his stamp on the firm” in his new capacity as sole CEO.

After McCormick’s departure, Bridgewater continued to reduce its workforce, laying off an additional 100 people this past March, according to Bloomberg.

Around the same time – and perhaps as a result of that move – the company ended its participation in First Five Plus. Under the terms of Bridgewater’s termination of the agreement, it would forgo $18 million in tax credits that it would have otherwise been entitled to accrue in the initial deal, and pay the state $6.5 million in principal and interest on $6 million of the loans it received.

So long as Bridgewater pledged not to relocate before May 2026, the company would also be able to keep the $12 million in tax credits and $5 million in grants it already received, as well as have its $11 million in outstanding loans forgiven.

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