The private equity industry came under the microscope — and, at times, under attack — yesterday at a House Financial Services Committee hearing on private equity practices, Pensions & Investments reported. Some possible actions discussed at the hearing were several legislative proposals, including H.R. 3848, the "Stop Wall Street Looting Act of 2019," that would require private equity funds to share debt liability, prohibit capital distributions for two years after buyouts, create new marketing disclosure regulations, among other measures, a companion to legislation introduced by Sen. Elizabeth Warren (D-Mass). Other legislative proposals on the drawing board include one calling for board composition disclosure by private equity firms and the proposed Investment Adviser Alignment Act, which would require SEC reporting on fees and expenses, impose a fiduciary duty on private equity funds and allow communication among limited partners. Wayne Moore, trustee of the $58.4 billion Los Angeles County Employee Retirement Association, Pasadena, Calif., testified that more disclosure of private equity fees and expenses will help public pension fund investors. "My fiduciary duties include making sure we get what we pay for," he said. "Private equity is one of our best performing assets, but it is also our most costly asset," he told the committee, adding later that "information is critical, and we lack the information we need." A committee memo noted that state legislatures in California, Washington and Virginia have passed laws requiring public disclosure of information about private fund fees and expenses. Read more.
To watch a replay of the hearing and to read prepared testimony, please click here.
