NY Times: Behind Private Equity’s Curtain
Behind Private Equity’s Curtain
By GRETCHEN MORGENSONOCT. 18, 2014
From New York to California, Wisconsin to Texas, hundreds of thousands of teachers, firefighters, police officers and other public employees are relying on their pensions for financial security.
Private equity firms are relying on their pensions, too. Over the last 10 years, pension funds have piled into private equity buyout funds. But in exchange for what they hope will be hefty returns, many pension funds have signed onto a kind of omerta, or code of silence, about the terms of the funds’ investments.
Consider a recent legal battle involving the Carlyle Group.
In August, Carlyle settled a lawsuit contending that it and other large buyout firms had colluded to suppress the share prices of companies they were acquiring. The lawsuit ensnared some big names in private equity — Bain Capital, Kohlberg Kravis Roberts and TPG, as well as Carlyle — but one by one the firms settled, without admitting wrongdoing. Carlyle agreed to pay $115 million in the settlement. But the firm didn’t shoulder those costs. Nor did Carlyle executives or shareholders.
http://www.nytimes.com/2014/10/19/business/retirement/behind-private-equitys-curtain.html
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These are the real problem child(ren) in our economic system. They are buying every US business they can get their hands on, pumping and dumping, then reselling, all hiding behind an opaque system set up by the very people who are supposed to represent. This is why they don't want the IRS tax code fixed - derivatives and private equity funds want to keep their tax deductions under secrecy. Frank-Dodd was supposed to fix this, but it was cut in committee.
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