AFL-CIO Challenges Blackstone IPO
The US national trade union center AFL-CIO has challenged Bladkstone's USD 40 billion public offering by calling on the Securities and Exchange Commission (SEC, the federal regulatory agency) to require Blackstone to register as an investment company subject to applicable legal requirements under the 1940 Investment Company Act.
The US national trade union center AFL-CIO has challenged Bladkstone's USD 40 billion public offering by calling on the Securities and Exchange Commission (SEC, the federal regulatory agency) to require Blackstone to register as an investment company subject to applicable legal requirements under the 1940 Investment Company Act.
The Act imposes strict corporate governance requirements for investment companies offering public shares. Blackstone has structured its offering as a partnership exempt from requirements concerning, for example, fiduciary duty to investors or independent representation on the company board.
In its letter to the SEC, the union points out that the IPO structure "serves no practical purpose aside from creating a mechanism for Blackstone Group to sell its shares to the public without being regulated by the Commission". The AFL-CIO emphasizes that if the IPO goes ahead as planned, it would open the floodgates for other private equity and investment pools to tap public security markets while avoiding regulation. US-based private equity funds have for some time been evading US regulatory restrictions by listing on European stock markets.
The full text of the letter is available by clicking here.