Legislation recently reintroduced in the U.S. House of Representatives would reform the private equity industry.
Specifically, the Stop Wall Street Looting Act would require private equity firms, the firms’ general partners, and their insiders to have liability for debt, legal judgments, and pension-related obligations.
Additionally, how much money private equity firms can extract from companies would be limited and the firms would be prevented from walking away when a company fails.
Workers protections include increasing the priority claims for unpaid earnings and other benefits from $10,000 to $20,000 per worker, creating incentives for job retention, expanding protections for striking workers by clarifying labor practices and the employer duty to bargain, and ending the immunity of private equity firms from legal liability when their portfolio companies break the law.
Private equity managers will be required to disclose fees, returns, and other information about their funds and the corporate loans.
Firms receiving funds from a federal or state agency must publicly disclose how the funds are used.
The bill also prohibits payments from federal health programs to entities that sell assets or use assets for a loan collateral made to a Real Estate Investment Trust.
The bill was referred to the House Committee on Ways and Means and has the support of multiple organizations.