US Senator Elizabeth Warren’s Stop Wall Street Looting Act has returned. The Democrat and several of her colleagues yesterday reintroduced the bill intended to fundamentally reform private equity and end the industry’s “abusive practices”, according to a statement. The draft legislation, a version of which first appeared in 2019, would, among other things:
- Make GPs share responsibility for the liabilities of companies under their control – including debt, legal judgments and pension-related obligations;
- Ban dividends to investors and the outsourcing of jobs for two years after a firm is acquired;
- Require managers to disclose fees, returns and other information about their funds so that investors can monitor their investments and shop around;
- Reinstate Dodd-Frank provisions requiring arrangers of corporate debt securitisation to retain some risk.
The move drew a response from pressure group the US Chamber of Commerce, which says it could lead to the loss of anywhere from 6.2 million to 26.3 million jobs. While this bill may just disappear like its previous incarnation, PE is already facing an assault on carried interest taxation in the US. The direction of travel suggests Warren’s bill might gain more traction this time around.