PE HUB Wire Highlights, 9.27.19

FlowStone shops private equity for everyone, Howard Marks rails against wealth taxes

Happy Friday!

Politics: Since it’s Friday, I thought it would be a good time to get into politics. Howard Marks, co-chair of Oaktree Capital Group, gave a keynote address at PEI’s Private Debt Investor Forum this week. He shared his thoughts about some of the proposals coming from Democratic candidates, including “wealth taxes” from candidates Elizabeth Warren and Bernie Sanders.

“I believe in taxation, I believe in progressive taxation, but I don’t think it should be punitive and I think when you reach levels where it discourages risk taking and free enterprise, then it’s bad for society, and most people can’t figure that out for themselves,” he said. Check out the story from Justin Mitchell here.

Warren’s tax is 2 percent on household net worth between $50 million and $1 billion, with an extra 1 percent surtax on household worth above $1 billion. Sanders’ plan would start at 1 percent on married couples with a net worth above $32 million and increase to 2 percent on net worth between $50 million and $200 million, with incremental increases until reaching a cap of 8 percent on wealth over $10 billion.

Warren also of course proposed a comprehensive regulation plan that would fundamentally change the way private equity operates. See my column on the plan here. It’s still a long shot Warren’s Stop Wall Street Looting Act of 2019 will see the light of day, or at least in its current form, but with ever-shifting drama of the current administration, who knows what tomorrow will bring.

PublicInstitutional Limited Partners Association is supportive of the transparency aspects of Warren’s plan. ILPA published its third quarter newsletter, that says: “Taken as a whole, the bill calls for more transparency and stronger fiduciary duties in the private equity industry, ideals that ILPA has been promoting with policymakers and regulators for some time.

The bill calls for more transparency about fees and performance. Illinois State Treasurer Michael Frerichs said when the bill was introduced the system wants to see more transparency around fees and expenses.