After nearly a lifetime of work, everyone should be able to retire with dignity. However, workers and retirees run up against threats to the benefits they’ve earned through their years of hard work. As organized labor, we fight back.
Unfortunately, a new threat has emerged. Activist investors are getting rich by targeting a type of investment vehicle called closed-end funds – the smaller cousin of mutual funds – and are preying on Ohio’s retirement savers, including union retirees.
These investors are exploiting a loophole in current law by buying up shares in the closed-end funds and taking them over, only to ditch reliable investments in favor of riskier assets like crypto and private prisons. Then, they liquidate their positions in the fund for a profit.
So why should Ohio retirement savers care about this complicated financial issue? Your retirement investments are being sabotaged in the process. Closed-end funds are an important source of income for seniors and union retirees, and these investors are contributing to a decline in these important investment vehicles. Thousands of seniors in Ohio and millions across the country – as well as union pension funds – put significant amounts of their savings into these funds, confident that they’ll get a steady stream of income.
Make no mistake, this is happening. Three years ago, a hedge fund firm took over a closed-end fund. They changed the investment strategy from a reliable ‘senior loan fund’ to a fund holding risky assets, including crypto. Worse yet, they liquidated their shares, leaving unwitting retirees holding the bag. The same playbook seems underway on another closed-end fund now.
This flies in the face of the basic principles of the Investment Company Act, the current law that is intended to separate hedge fund billionaires and fund insiders from the rest of us and stops them from eating our investments lunch.
Retirees are victims here – plain and simple – it’s on Congress to take action to protect them.
Our senior U.S. Senator Sherrod Brown has dedicated his career to standing up for working people and retirees. As Chair of the Senate Banking Committee, he has the opportunity to support the bipartisan Increasing Investor Opportunities Act to close the loophole before activist billionaires do more damage.
