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Blood on their hands

A recent announcement by a very large private equity/venture capital firm stated as follows: "In 2006 affiliates of Cerberus Capital Management, L.P. made a financial investment in Freedom Group." Freedom Group manufactures the Bushmaster Rifle. The Bushmaster was used to kill 26 people in Newtown, Ct., including twenty 6 and 7 year old children.

As the firms' press statement noted, "established in 1992, Cerberus Capital Management, L.P. is one of the world's leading private investment firms. Cerberus has more than US $20 billion under management invested in four primary strategies: distressed securities & assets; control and non-control private equity; commercial mid-market lending and real estate-related investments."

In seeking social credit for moving quickly to sell its investment in Freedom (Firearms) Group, Cerberus makes a number of spurious and disingenuous claims. Among these are the following:

"As a Firm, we are investors, not statesmen or policy makers. Our role is to make investments on behalf of our clients who are comprised of the pension plans of firemen, teachers, policemen and other municipal workers and unions, endowments, and other institutions and individuals. It is not our role to take positions, or attempt to shape or influence the gun control policy debate. That is the job of our federal and state legislators."

This is the "you are guilty, too" argument made by reference to "pension plans of firemen, teachers, policemen and other municipal workers and unions, endowments, and other institutions and individuals." As a large investment adviser in a highly unregulated space, Cerberus has full control over their investments. Clients, including firemen, teachers, policemen and other municipal workers, are prohibited from actually selecting investments. If I were these clients I would immediately place Cerberus on my review list, with an eye toward replacing the firm. "Firemen, teachers, policemen and other municipal workers" will want to know why they are being blamed.

Many faith based pension funds and other socially responsible investors do not invest in firms like Freedom (Firearms) Group specifically because they do not want to profit from human bloodshed. Cerberus was empowered to make the same choice. They did not. 

The next thing to notice is the claim that they are "investors, not statesmen or policy makers." This, too, is false. This firm, and others like them are, deeply involved in every policy issue of any consequence, from debates on taxing carried interest to discussions concerning financial reform. They are involved in the gun control debate, too, through their PAC and campaign contributions.

There can be no question that they bear some, admittedly limited, responsibility for the events in Newtown, Ct., as evidenced by the fact that they, and their clients, will be the target of several lawsuits. 

Now they, and their clients, have the blood of innocents on their hands. 

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