In December 2016, the Committee on Foreign Investment in the United States approved the CHX deal. But in August, the SEC delayed action on the purchase and has offered no timeline for when it will make a decision. | Getty

Rival investors seek to stop Chinese takeover of Chicago Stock Exchange

By PATRICK TEMPLE-WEST

 

10/02/2017 

A group of U.S. investors hoping to buy the Chicago Stock Exchange is lobbying Congress to torpedo a rival, Chinese-backed acquisition proposal that is stalled at the Securities and Exchange Commission.

Lobbyists representing “Exchange Capital LLC,” a special-purpose entity for a private-equity investor group, said they helped generate a Sept. 26 letter led by Rep. Robert Pittenger (R-N.C.) to the SEC raising "serious concerns" over the CHX acquisition.

Exchange Capital is being represented by Adam Olsen of Sconset Strategies and Chas Thomas of Thorn Run Partners. Thomas is a former Pittenger staffer.

Both lobbyists said they also asked members of the Senate Banking Committee to voice concerns with the CHX deal at a hearing with SEC Chairman Jay Clayton on Tuesday.

Olsen and Thomas declined to identify the rival investors for CHX, only saying that they are all American.

“I represent a group of substantial American investors who are interested in potentially acquiring the Chicago Stock Exchange,” Olsen said. “And we have been working with the relevant members of the House and Senate committees to further that goal.”

Exchange Capital paid Sconset $170,000 in 2016 and 2017, according to lobbying disclosures.

The CHX acquisition, announced in February 2016, quickly drew criticism from Republicans, including presidential candidate Donald Trump. The investor group comprises 50.5 percent U.S. owners and 49.5 percent private Chinese investors.

In December 2016, the Committee on Foreign Investment in the United States, the group of government regulators that vets international acquisitions of American assets, approved the CHX deal. But in August, the SEC delayed action on the purchase and has offered no timeline for when it will make a decision.

In a statement to POLITICO, CHX’s CEO John Kerin blasted the rival investor group.

“CHX is aware of a coordinated effort to utilize lobbying, xenophobic fake news, and other tactics to interfere with its legitimate transaction,” Kerin said. “We condemn using such methods under the guise of national security and investor protection, when the true motivation is personal gain.”

Both Olsen and Thomas denied they were involved in any covert effort to oppose the CHX deal with misattributed comment letters to the SEC.

In February, the SEC received a comment letter that appears to be from the Alliance for American Manufacturing, an advocacy group, opposing the CHX deal.

After POLITICO contacted AAM about the letter, the trade group said that what was posted on the SEC’s website was wrongly attributed to them.

“While it is clear that the Chinese acquisition of the Chicago Stock Exchange needs to be thoroughly reviewed, the Alliance for American Manufacturing did not submit this or any letter to the SEC,” said Scott Paul, president of the AAM.

And in January 2017, the Global Investigative Journalism Network got the SEC to remove a letter wrongly attributed to the group that opposed the Chicago Stock Exchange deal.

“I'd like to know who's using our good name,” GIJN’s executive director David Kaplan said.