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Senators Ask for Impact Study on Proposed Blackstone Bill

Reuters
Wednesday, 20 Jun 2007 | 3:27 PM ET

The leaders of the Senate Banking Committee Wednesday asked the Treasury Department and the Securities and Exchange Commission for analysis of legislation that would raise taxes on private equity funds going public, like Blackstone Group.

Sens. Christopher Dodd and Richard Shelby, the Democratic chairman and senior Republican on the panel, respectively, asked about the bill's "likely impact on the nation's capital markets, including the potential effects on investor protection, capital formation and other relevant issues."

The bill was introduced last week by the leaders of the Senate Finance Committee -- Chairman Max Baucus, a Montana Democrat, and senior Republican Chuck Grassley, of Iowa.

It would require publicly traded partnerships deriving income from investment adviser and asset management services to pay the federal corporation tax rate of up to 35% instead of the 15%rate their partners now pay.

The bill stunned the financial community, coming a week ahead of the expected pricing Thursday of Blackstone's initial public offering valued at about $4 billion. Blackstone is one of the nation's largest private equity firms.

Connecticut's Dodd, a presidential candidate, and Alabama's Shelby also asked for "quantitative and qualitative data on the universe of publicly traded partnerships, including the numbers of such firms and their business activities, and data on the partnerships that such legislation would affect."

The request was made in letters dated June 20 to Treasury Secretary Henry Paulson and SEC Chairman Christopher Cox.

Earlier on Wednesday at an SEC meeting, Cox refused to comment on the Senate bill or Blackstone's offering.

Dodd said Tuesday that, as chairman of the banking committee, he planned to examine the potential market and economic impact of the Baucus/Grassley bill.

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