• Business
    Bloomberg

    Private Equity Gets a Big Win With U.S. Nod to Tap 401(k) Plans

    (Bloomberg) -- Private-equity firms notched a major win in Washington with the Trump administration paving the way for the industry to tap a massive pot of money that has long been off limits: the trillions of dollars held in Americans’ retirement accounts.The Labor Department issued guidance Wednesday effectively allowing 401(k) plans to invest in buyout firms. The agency said the move will bolster investment options for consumers and let them access an asset class that can provide better earnings than stocks and bonds.In a statement, Labor Secretary Eugene Scalia said the action “will help Americans saving for retirement gain access to alternative investments that often provide strong returns.”The announcement is a significant deregulatory decision that private-equity lobbyists have sought for years. The move was blasted by consumer groups, which argue that high-fee private equity firms are inappropriate for unsophisticated investors because the industry locks up clients’ money for years and backs businesses seen as far riskier than plain-vanilla bond funds.Deregulatory AgendaBetter Markets Chief Executive Officer Dennis Kelleher, whose group has fought the Trump administration’s push to dial back rules, accused Labor of inappropriately using the coronavirus crisis to loosen restrictions on 401(k) investments. Labor’s press release noted that President Donald Trump had issued an executive order directing agencies to “remove barriers” that would stand in the way of the economic recovery from the pandemic.“The last thing the Department of Labor should be doing is enabling or encouraging retiree money to be diverted from transparent public markets with significant disclosure and investor protections to high-risk, dark private markets with little disclosure and few investor protections,” Kelleher said in a statement. “To use the pandemic as a pretext for this irresponsible action is adding insult to injury.”Public pension funds that manage employees’ retirement savings have a long history of investing in private equity. But complex regulations and concerns about being sued have until now kept individuals’ 401(k) plans out. The private-equity industry has ramped up its campaign to change the rules during the Trump administration, which has made cutting back regulations a core element of its economic platform.Labor’s guidance was focused on professionally managed investment funds that include several types of assets. The agency said it wasn’t green-lighting private equity investments to be offered as a standalone option.‘Positive Step’American Investment Council President Drew Maloney, whose group lobbies for private equity firms, lauded the move.“This is a positive step towards helping more Americans gain access to private equity investment, which regularly is the best performing asset class for pensioners including teachers and firefighters,” he said in a statement.The announcement was also praised by Securities and Exchange Commission Chairman Jay Clayton, whose agency has been considering ways to let retail investors access asset classes that have been largely reserved for the wealthy.Under current SEC regulations, firms such as Apollo Global Management Inc., Blackstone Group Inc., Carlyle Group Inc. and KKR & Co. are mostly limited to raising money from the super rich, sovereign wealth funds and pension funds.Democratizing InvestmentsGroom Law Group principal David Levine, whose firm requested the Labor Department guidance on behalf of its clients, said the move would have a notable impact on workers saving for retirement.“By issuing the guidance, the Department of Labor has taken great steps to democratize the use of private equity in many Americans’ largest investment asset -- their retirement accounts,” he said.(Updates with comments in sixth and 10th paragraphs.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • Celebrity
    Yahoo Finance UK

    Coronavirus: KFC heiress pledges to raise $1m to support LGBT+ community amid pandemic

    The heiress and celebrity lingerie designer will help employ LGBT+ people and raise $1m for charity.

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  • U.S.
    ProFootball Talk on NBC Sports

    Backlash from Michael Thomas, among others, forces Drew Brees to clarify comments

    Saints quarterback Drew Brees, who possibly has political aspirations, may be rethinking his future career choices after jumping onto a third rail with both feet on Wednesday. Brees, at a critical moment in American history that has caused many to reconsider the message arising from the anthem protests launched by Colin Kaepernick in 2016, has [more]

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  • Entertainment
    Variety

    K-Pop Fans Take Over #WhiteLivesMatter Hashtag to Drown Out Racist Posts

    In an anti-racist move that demonstrates their formidable social-media power, K-Pop fans took over the hashtag whitelivesmatter, drowning out white-supremacist messages with nonsensical or anti-racist posts. The move was met with wide approval online early Wednesday morning. “WhiteLivesMatter LMAO I WAS READY TO INSULT THE SH- OUT OF EVERYONE,” one poster wrote. “THEN I SAW […]

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  • Business
    Reuters

    U.S. airlines gain final approval to drop services to 75 domestic airports

    Fifteen U.S. airlines were granted final government approval on Wednesday to temporarily halt service to 75 domestic airports as travel demand has been crushed due to the coronavirus pandemic. The U.S. Transportation Department said all airports would continue to be served by at least one air carrier. The U.S. airline industry has been awarded $25 billion in government payroll assistance grants to help weather the pandemic.

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