Hoffa Commends Congress for Rules on Private Investment Funds

Jun 16, 2010, 16:48 ET from International Brotherhood of Teamsters

Teamsters Advocated Tougher Regulation of Private Equity

WASHINGTON, June 16 /PRNewswire-USNewswire/ -- Teamsters General President Jim Hoffa today said he is pleased that lawmakers included more oversight of private investment funds in the final financial regulation bill.

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House and Senate conferees agreed on Tuesday to require private equity fund advisers to register with the Securities and Exchange Commission. Private equity funds that have more than $150 in assets will be subjected to regular inspections and audits and requirements for greater disclosure.  They will also have to establish formal compliance policies.

"Private equity firms have destroyed too many companies and too many jobs to continue to operate without any transparency," Hoffa said. "They load too much debt onto companies, charge outrageous fees and fail to invest in plant, equipment or training. I applaud the conference committee for requiring greater oversight and disclosure of these predatory companies."

In recent years, workers have suffered when their company was taken over by private equity.  For example:

  • Kohlberg Kravis Roberts & Co. and its partner CD&R have weakened U.S. Foodservice, Inc., by pushing employees to exhaustion, cutting more than a thousand jobs and drawing federal complaints for violations of almost 200 labor laws in Phoenix.
  • Madison Dearborn Partners has undermined VWR, a scientific equipment supplier, by reversing more than 50 years of productive and cooperative relations with workers and their union.  

Hoffa on Tuesday sent a letter to Rep. Barney Frank, chairman of the House Committee on Financial Services, urging that the conference committee adopt restrictions on private equity.

In the letter, he pointed out that private equity firms could cause defaults resulting in more job cuts and financial losses than the subprime mortgage crisis caused.

Founded in 1903, the International Brotherhood of Teamsters represents more than 1.4 million hardworking men and women in the United States, Canada and Puerto Rico.

SOURCE International Brotherhood of Teamsters