Dan Pedrotty, director of the AFL-CIO’s Office of Investment, told CNBC’s “Morning Call” that Blackstone Group should be required to register as an investment company before launching its IPO.
“Our reading of this IPO is that Blackstone deliberately structured it in a way to hide the fact that what they’re really offering is an investment company,” Pedrotty said Thursday. “They’re selling interests in pools of securities.”
He said that allows Blackstone to sell an interest in hedge funds while avoiding regulations that prohibit fraud, self-dealing, theft and breach of fiduciary duty.
“The problem, as we see it, is: others will follow – mutual funds, other private equity firms are eyeing this transaction very closely,” Pedrotty said. “We feel the SEC should enforce the law and require Blackstone to register as an investment company under the 1940 act.”