02/09/2022 | Press release | Distributed by Public on 02/09/2022 19:17
WASHINGTON-American Federation of Teachers President Randi Weingarten issued the following statement after the Securities and Exchange Commission issued long-awaited rules cracking down on private equity, requiring firms to be more transparent with investors regarding fees, performance and conflicts of interest:
"For too long, the private equity industry has kept public pension funds in the dark about the fees they charge and their financial performance, creating a new class of billionaires while refusing to disclose the true costs to the workers who rely on these funds to retire in dignity.
"Today, the SEC announced new proposed rules that would train a spotlight on the significant investment risks that private equity poses to pension funds and other institutional investors. This represents a crucial step forward in protecting workers' retirement security by holding the industry accountable, so retirees and families don't get gouged by Wall Street firms that fleece, rather than help, the people who entrust them with their future."
The new rules target the exorbitant and unjustifiable fees the industry collects from investors, requiring all private equity firms to report all fees to investors on a quarterly basis. They would also require private equity firms to provide investors with more-comprehensive financial performance and expense data and would prohibit them from giving certain investors preferential treatment that has the potential to harm other investors.
The majority of the AFT's 1.7 million members participate in public pension funds totaling an estimated $4.5 trillion. The AFT has produced several reports exposing the risks to pension funds posed by private equity and other alternative investments, including "Lifting the Curtain on Private Equity: A Guide for Institutional Investors and Policymakers," co-published with Americans for Financial Reform in 2021, exposing the investment risks and diminished returns associated with the industry. The AFT is a strong supporter of the Stop Wall Street Looting Act.