Lawmakers Trash Private Equity Report by Ernst & Young
Sen. Elizabeth Warren, Sen. Bernie Sanders, and other lawmakers call the report a result of “sham research.”
In a hard-hitting letter to Ernst & Young, the lawmakers alleged the private equity industry was fighting their Stop Wall Street Looting Act of 2019 “at every turn.”
“We have questions about the role your firm is playing in providing rigged reports and conclusions as part of this effort,” their letter also said. It was addressed to Carmine Di Sibio, Global Chairman and Chief Executive Officer, Ernst & Young AG.
Sen. Warren has a history of skirmishes with private equity and Wall Street. The Stop Wall Street Looting Act is her brainchild. It seeks to make PE firms responsible for the debts and pension obligations of their target companies. Further, it also limits and makes more transparent their payouts of fees, bonuses, and dividends.
Elizabeth Warren Vs Ernst & Young: Picture-perfect sham
Further, they went on to allege in the letter: “There is a myriad of other ways that corporate interests can wield their influence. One way they do so is by funding sham research – by consultants and researchers who receive big bucks for their work – to back up their views. The new EY report, prepared with and for a trade group for the private equity industry, appears to be a picture-perfect example of such sham study,” said the letter. [Emphasis added]
What the Ernst & Young report contains/claims
- PE provides growth equity and skilled managers to needy companies
- Annual wage and employment contribution by PE is $600 billion for 8.8 million workers
- PE added $1.1 trillion in value to the US economy
- $174 billion paid in taxes by the PE industry
However, Sen. Elizabeth Warren and the lawmakers have questioned, rebutted, or junked the above statistics and other data in the Ernst & Young report.
They also demanded information such as Ernst & Young’s remuneration for preparing the report. Additionally, they asked for data on how many jobs private equity-owned companies added or lost – broken down by industry.
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