The shadow bank’s legacy includes controversial investments, lawsuits and financing the destruction of local news
By Julie Reynolds
Citing a New York shadow bank’s dual track record of “funding gun violence and death” and the destruction of local news, the NewsGuild-CWA is urging two of the nation’s largest public pension funds to divest from Cerberus Capital Management.
In March 29 letters to Pennsylvania’s Public School Employees’ Retirement System (PSERS) and the California Public Employees Retirement System (CalPERS), Guild president Jon Schleuss described “Cerberus’ risky behavior investing in firms that advertise military-grade weaponry that has been used to kill civilians.”
The February $73 million settlement with Sandy Hooks victims’ families by Remington Outdoor Company — owned by Cerberus until the gun maker went bankrupt — includes an agreement to release internal documents likely to shed light on the ways Cerberus and Remington “disregarded public safety guard rails” by their aggressive advertising aimed at young men, Schleuss wrote.
“Cerberus has shown itself willing to make problematic investments,” the letters said. “In the case of the gun industry, it accepted greater investment risk and failed.”
“That Cerberus was able to exit through (Remington’s) bankruptcy should not give comfort to investors,” Schleuss added.
The union sent letters to both funds in September, urging them to “engage with Cerberus to help save local news.”
Now the Guild is going a step further, pushing for full divestment in light of the Sandy Hook settlement, saying Cerberus not only “showed an immoral disregard for human life, but raised investment and reputational risk” for the pension funds and other investors.
Besides Remington, Cerberus once owned the scandal- and lawsuit-ridden military contractor DynCorp, and more recently founded and financed Tier 1 Group, the paramilitary school that trained Washington Post journalist Jamal Khashoggi’s assassins.
Cerberus is also, as I reported for Harvard’s Nieman Lab, the “shadow” funder behind Alden Global Capital, financing the hedge fund’s hostile takeover of Tribune Publishing.
Highlighting 60 Minutes’ recent report on Alden’s impact on local news, Schleuss warned the pension fund boards that “such high- profile reporting of Alden’s destructive role in the news industry underscores the reputational risk that Cerberus investors may bear.”
Eight of Cerberus’s top 10 investors are public pension systems, which in effect means it is at least partially supported by taxpayers.
CalPERS, the country’s largest public pension plan, has plowed $2 billion into Cerberus since 2012, public records show, making it Cerberus’ largest investor. PSERS has invested $1.65 billion with Cerberus since 2003.
Other public funds that have invested tens of millions with Cerberus include the San Francisco Employees’ Retirement System, Louisiana State Employees’ Retirement System, New Mexico Public Employees’ Retirement Association, San Diego City Employees Retirement System, New York State Teachers’ Retirement System, Oklahoma Police Pension and Retirement System, Alameda County Employees’ Retirement Association and the Arkansas Teacher Retirement System.
NewsGuild members from Alden-run newspapers, including journalists and a page designer, have spoken this year at several of these funds’ board meetings, urging them to divest from Cerberus.