For years, the retirement savings of teachers, firefighters, and other government workers have been funneled by public officials to secretive Wall Street firms that charge high fees in exchange for the false promise of outsized returns. But as the stock market plummets and asset values drop, there are new fears that pensioners will be unable to access their cash, while insiders will be allowed to pull their money out before things get worse.
Now, Wall Street firms and their political allies — including a US senator with substantial private equity holdings — are trying to stop federal regulators from intervening to protect retirees by banning firms from giving some investors preferential treatment. And there are no rules requiring lawmakers with investments in private equity to disclose whether they are being given special investment preferences while they lobby to protect those asset managers.
The new battle revolves around the secret “side letters” that private equity, hedge fund, and real estate firms ink with individual investors, giving them privileges not afforded to others in the same investment funds.
In disclosure documents reviewed by the Lever, many firms managing millions of workers’ retirement savings say they can give certain…
