New Securities and Exchange Commission Rules Advance Provisions of Baldwin’s Brokaw Act to Help Protect Main Street from Wall Street Hedge Funds
WASHINGTON, D.C. — U.S. Senator Tammy Baldwin is applauding action taken by U.S. Securities and Exchange Commission that advance provisions of legislation she introduced that would bring more transparency to the private equity industry and activists hedge funds.
Today, the SEC announced plans to restore transparency to the marketplace by shortening the 10-day 13(d) disclosure window to five days. And in December, the SEC released a rule that would restrict hedge funds and family offices from using complex derivatives to secretly build huge stakes in public companies.
“I introduced legislation that would update outdated rules to address the financial abuses being carried out by activist hedge funds who promote short-term gains at the expense of workers, taxpayers and local communities,” said Senator Baldwin. “I applaud the SEC for taking action to increase transparency and strengthen oversight of predatory hedge funds. These reforms will help rewrite the rules for Wall Street so the playing field works better for our Main Street economy.”
Senator Baldwin introduced the Brokaw Act in 2017 to fight against increasing short-termism in our economy by promoting transparency and strengthening oversight of activist hedge funds. The legislation proposed putting in place the following reforms; restore transparency to the marketplace by shortening the 10-day 13(d) disclosure window; require derivative disclosure to ensure activist investors do not hold secret positions in a company’s stock; and protect businesses from hedge fund “wolf packs” by identifying these coordinated groups of hedge funds as a single group to require disclosure.
Baldwin’s legislation was named for a small Wisconsin village that faced insolvency after the actions of an out-of-state activist hedge fund led to the closure of a paper mill that had provided good jobs to the town for over 100 years. The activist hedge fund bought up the legendary Wausau Paper Company, forced out its executives and demanded short-term returns like buybacks at the expense of investments in workers, R&D, and the company’s long-term future. In 2017, Senator Baldwin put a hold on two SEC nominees before receiving assurances from them that they were committed to reining in activist hedge funds.