FOR IMMEDIATE RELEASE
October 24, 2023
SEC Commissioner Crenshaw Echoes AFR’s Concerns on Leveraged Loans Lacking Protection Under Securities Laws
Washington, D.C. — SEC Commissioner Caroline Crenshaw gave a notable speech at an event sponsored by the Center for American Progress on October 11th warning of the dangers posed by the fact that the $1.4 trillion leveraged loan market, often used to finance private equity takeovers, is not subject to securities laws, and therefore operates without many investor protections.
Commissioner Crenshaw’s remarks underlined a number of concerns that we raised in our amicus brief filed in the Kirschner v. JP Morgan case in February pointing out that leveraged loans are not really loans, and operate very much like high yield “junk” bonds, which are securities.
Given the lack of investor protections and the growing risks in the market, there are many reasons to worry that an economic slowdown would lead to over indebted companies reducing their investments as well as their workforces, spreading losses throughout the financial system and the economy.