Page last updated at 11:15 GMT, Monday, 14 September 2009 12:15 UK

Star trader defends bonus payouts

By Jon Bithrey
Business reporter, BBC News, New York

Adam Levinson
Adam Levinson was coy about his own payout

A Wall Street trader thought to have received the biggest bonus of all time has defended industry payouts.

Adam Levinson runs two hedge funds at Fortress Investments. It was so keen to keep hold of him that they reportedly gave him a $300m slice of the company.

"In this business our...mission is to generate returns to investors. If we don't succeed in that task, we don't get paid," he told BBC World Service.

"If we do, we do," he said at his office in Midtown Manhattan.

He hadn't spoken to the media at all since his "mega-bonus" - as Britain's Mirror newspaper described it - made the news last August.

However, he refused to be drawn on his personal pay packet.

'Biggest payday'

He made it clear to us that whilst he was happy to answer questions about remuneration in general, he didn't want to talk about what some have called "the biggest payday in history".

The act of regulation doesn't scare me or bother me
Adam Levinson

What he did say though, is that in exchange for a share in the company, he gave up some of his entitlement to proceeds from his funds' profits.

Mr Levinson is prepared to concede that pay structures may have played a role in the excessive risk taking by banks:

"Investment banks are regulated institutions, which posed systemic risks. The risk-taking that generated excessive gains and then resulted in extraordinary losses may have been the result of the compensation structure."

"Then again it might not be terribly important. Either way, it's probably worth looking at".

He was also keen to emphasise what he viewed as the difference between running a hedge fund, focused solely on making often short term investments with its own capital, and the broader activities of investment banks.

"Those institutions are engaged in a series of services from asset management to sales and trading. There are so many different elements that there can be conflicts."

Greater regulation

Mr Levinson has been in the hedge fund business since 2002 - before that he worked as a trader for Goldman Sachs in several of the world's big financial centres.

He witnessed a big expansion in the size and influence of hedge funds for several years before the financial crisis.

"This industry went through a phase of extraordinarily high growth. Recently it's become smaller and far more streamlined, versus certain bloated characteristics that it had before."

He agrees with a push to subject the hedge fund industry to greater scrutiny in the post-crisis world, with efforts likely to be discussed once again at the forthcoming G20 summit in Pittsburgh.

"The act of regulation doesn't scare me or bother me. In fact I think the industry should be regulated and we've been preparing for regulation for years. It's actually a necessary agreement in restoring confidence".

Despite being one of the wealthiest men in finance, he thinks the gap between rich and poor in American society may have become too wide in the last three decades - and believes that that may partly be contributing to the current political backlash.

And he's a supporter of inheritance tax.

"It's very good for society and incentivises production rather than protecting the interests of certain families. If you're going to tax somebody, then tax inheritance. I'm not sure my kids deserve my money, or at least deserve it without a healthy government tax.

The US tax collectors - the Internal Revenue Service - must be rubbing their hands in glee at the thought.

You can hear the full interview with Adam Levinson on Business Daily on the BBC World Service on Monday 14 September, or go to the World Service website.



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