Washington, D.C. — Americans for Financial Reform applauds the House Financial Services Committee’s passage of Rep. Maloney’s long-standing bill, the Overdraft Protection Act, which passed by a vote of 27-22.
AFREF sent a comment to the Securities and Exchange Commission calling for the agency to close long-running loopholes that have enabled certain hedge funds to use swaps and derivatives to avoid disclosing large positions which in turn can lead to coordinated attacks on companies and unnecessary volatility in the underlying prices of certain companies’ stocks. The implosion of family office Archegos Capital is emblematic of such a problem as its use of certain derivatives to build over an over 10% position of a company’s outstanding shares were never revealed until after it was forced to unwind and leading Globally Systemically Important Banks (G-SIBs) to take over $10 billion in losses as a result.
AFREF sent a comment to the Securities and Exchange Commission supporting the agency’s proposal to expand position disclosure requirements (via Form PF) for both hedge funds and private equity funds. Many of the disclosure exemptions were formed when both types of funds were fractions of the size they are today and would give the SEC and by extension, the Financial Stability Oversight Council (FSOC) critical information to prevent the uncertainty and threats to financial stability that we saw with Long Term Capital Management in 1999 as well as the financial crises of 2008 and March 2020.
The 18 organizations urge the Internal Revenue Service (IRS) to prioritize rebuilding its auditing and enforcement capabilities in order to tackle systemic tax abuses, including in particular those by the private equity industry. The private equity industry has generated greater untaxed revenues over the past decades by structuring their funds to avoid taxes and through a strategy of misclassifying certain earnings, exploiting tax loopholes like carried interest, and utilizing complex and opaque business structures to shield earnings from IRS scrutiny. We applaud President Biden’s plans to fund the IRS and tax enforcement more robustly and believe that these needed changes are a strong argument for such additional resources.
AFR has outlined issues around Payment for Order Flow, potential market manipulation by institutional investors, explosive growth in options trading volumes, the increasing gamification of stock trading by retail brokers, and a re-examination of broker capital rules.
AFR wrote a letter to Congress providing a number of policy recommendations that would help reign in SPAC mania and better protect investors.
The Americans for Financial Reform Education Fund is strongly urging the SEC against raising the quarterly reporting requirements for institutional investors 35-fold that would take away up to 90% of the existing reporting that is vital to market participants and researchers alike.
Voters support continued reform of Wall Street, and that conviction extends to the private equity industry, according to a new poll by Lake Research Partners and Chesapeake Beach Consulting. Majorities of Democrats, independents, and Republicans, oppose the predatory tactics of private equity industry, and support legislative proposals aimed at correcting its abuses.
AFR’s Senior Policy Analyst Alexis Goldstein appeared on CNN Newsroom with Brooke Baldwin on Wednesday, April 26th to discuss how the Trump Administration’s tax plan would benefit Wall Street and leave ordinary American workers behind. “We have two former bankers from Goldman Sachs announcing a tax plan that–from the details that we do know–will dramatically cut taxes for big banks like Goldman Sachs,” Goldstein said.
“Again and again, activist hedge funds have used sneak attacks to accumulate large stakes in public companies and then cashed out quickly at the expense of workers, communities, and the long-term viability of the company itself. The Brokaw Act is a sensible and badly needed response to this problem. With the introduction of their bill, Senators Baldwin and Merkley have struck an important blow against the immediate-profits-at-all-costs mentality that has become such a huge obstacle to long-term investment in our country.”