H.R. 10595: Stop Wall Street Looting Act

This bill would create a wide set of new rules for private-equity and private-fund managers, with changes to taxes, disclosures, bankruptcy treatment, worker protections, and certain investment practices.

Private Equity Liability and Debt Practices

The bill would make controlling private-equity funds more responsible for the debts and penalties of companies they control. It would also ban arrangements that let the fund avoid responsibility through indemnification. In addition, it would restrict practices such as stripping dividends out of target companies or transferring assets in ways that could weaken those companies.

Tax Changes for Fund Managers and Related Payments

The bill would limit the tax advantages currently available for carried interest and some partnership-based investment gains. In many cases, income that is now taxed at lower capital-gains rates would instead be treated as ordinary income. It would also tighten rules and penalties around related transfers, compensation arrangements, and reporting. Certain fund-related payouts and transactions would face additional tax treatment under the bill.

Bankruptcy and Worker Protections

The bill would strengthen protections for workers when companies owned by private funds go through strikes or bankruptcy. It would also add rules intended to prevent fund owners from shifting value out of struggling companies before or during bankruptcy, and would give workers and other stakeholders more protection in those proceedings.

Disclosure and Transparency Requirements

The bill would require much more public reporting from private funds and their advisers. This includes disclosures about fees, returns, debt levels, ownership structures, political spending, climate-related information, and workforce data. It would also require more disclosure for certain recipients of fund-related payments and for advisers involved in these transactions.

Fiduciary Duties and Adviser Rules

The bill would prohibit private-fund managers from waiving fiduciary duties in their agreements. It would also add stricter fiduciary and disclosure obligations for advisers, meaning they would have to act under more explicit responsibility standards and provide more information to investors and regulators.

Restrictions on Certain Transactions

The bill would limit some types of dealings involving real estate investment trusts and health-care businesses. It would also close some tax loopholes involving partnership interests and executive compensation, and it would limit or more tightly regulate risky debt securitization by private funds and related entities.

Relevant Companies

• KKR - A large private-equity and alternative-asset manager that could face tighter disclosure, liability, and tax rules affecting fund structures and portfolio-company transactions.
• CG - Carlyle, a major private-equity firm, could be directly affected by new limits on carried interest, fund disclosures, and portfolio-company financing practices.
• BX - Blackstone, which manages private equity and private credit strategies, could be impacted by new transparency, tax, and securitization restrictions.
• APO - Apollo, with substantial private credit and buyout activity, could be affected by rules on debt practices, disclosures, and tax treatment of fund-related income.
• ARES - Ares Management could be affected by the bill’s private-fund disclosure requirements and changes to taxation of partnership income and carried interest.
• TPG - TPG, a private-equity firm, could face direct impacts from the bill’s liability, disclosure, and carried-interest provisions.
• OWL - Blue Owl Capital, with large private credit and alternative-asset operations, could be affected by tighter reporting and restrictions on risky debt structures.
• HLNE - Hamilton Lane, an asset manager focused on private markets, could be impacted by expanded disclosure and tax rules for private-fund managers.