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June 1, 2007

Privet Equity

By Spear's

Deirdre Brennan on a tale of two high-flying financiers, one leafy foothpath and the season’s most frivolous feud

It’s summer again, and with the warm weather comes the usual host of scandals – CEOs seducing their secretaries, media moguls defrauding investors and hedge fund hustlers jetting off to locales unknown – but the most amusing bit of gossip making the rounds lately is a good old-fashioned feud between two famed financiers in the posh hamlet of East Hampton, New York.

Goldman Sachs managing director Marc Spilker and legendary short-seller Jim Chanos have recently been battling it out in court over the most mundane of topics – the width of a path to the beach, which runs along the edge of Chanos’ yard. In late June, just when the two hot-headed multi-millionaires were close to an agreement about the shared pathway (something about seven feet instead of four, yawn), the battle took a nasty turn, Hatfield and McCoy-style.

‘What, you haven’t heard what happened to my bushes?’ a pink-shirt clad Chanos, who runs the $1 billion hedge fund Kynikos, bellowed to a group of guests attending a recent barbecue at his sprawling seaside mansion. Indeed, when I accepted the invitation to the much ballyhooed annual event, my main motivation was not the lobster (which was delicious by the way), but to survey the scene of the crime.

Early this summer, before the final agreement could be drawn up and a landscaper commissioned to widen the path, Spilker hired a work crew, complete with earth mover, and declared war on the hedge-fund manager’s unsuspecting shrubbery, which borders the footpath in question. The wanton destruction, which would give any garden-loving Englishman a coronary, continued for an hour until the local police showed up to stop the demolition.

Hell hath no fury like a money manager with trampled hedges. The following day, Chanos, who does a good deal of business with Goldman Sachs, sent a scathing email to his Wall Street buddies, including many Goldman execs.

‘My outrage over this arbitrary and unilateral course of action is probably only exceeded by Mr/Mrs Spilker’s sense of entitlement that the four-foot-wide path to the beach (and specified in the local easement papers) “was just not wide enough for us”,’ Chanos wrote in the e-mail, adding: ‘I hope this is not a harbinger of how other Goldman senior executives may act when the markets become “just not lucrative enough for us!’’’

Wow, with words like that, I figured the backhoe had wiped out acres of pristine primroses, scarring the land so badly that regrowth would take decades. So, bored with the garden-party banter and armed with a gin and tonic, I wandered away from the festivities to find the famed footpath.

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Teetering on high-heeled sandals, I made my way down a steep lawn on the left side of the house, which looked as if it went, well, somewhere. No dice. I got to the edge of the grass and found that I was hemmed in by tall bushes on all sides. I casually took a sip of my drink and headed back uphill, more determined than ever to find the scene of the hedgicide.

My meanderings continued on for another fifteen minutes. By that time, I had found not one, but three paths down to the beach, and none of them looked as though they had been molested by earth moving equipment. Between the brilliant views, manicured lawns, picturesque pine trees and sandy dunes, not a blade of grass seemed to be out of place on the entire estate. The absurdity of the whole debacle hit me. Chanos, who made his fortune shorting Enron stock before anyone had ever heard of the failed energy giant, and Spilker, part of the top brass at the notoriously demure investment bank, had both lost their minds.

Not feeling defeated, but rather embarrassed that I had actually taken an interest in the petty fracas, I headed back to the party on the porch to eavesdrop on more mindless mudslinging. Besides, after all that walking, I badly needed a refill.

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