Regulate hedge fund activism, they need to study its impact on the economy as a For policymakers contemplating whether to Contrary to popular belief, it improves profitability, productivity, and innovation.Įffects on targeted firms is only part of the picture. Are these charges against hedge fundsĪctually true? Accordingly, a wealth of research has studied the long-termĮffects of hedge fund activism on the targeted firms. Undertaking reform, diagnosis precedes treatment. We cannot allow our economy to be hijacked by a small group of investors who only seek to enrich themselves at the expense of workers, communities and taxpayers.”Ĭonfirm most people’s perception of activists – as greedy capitalists – and so,ĭue to confirmation bias, they may be uncritically accepted even if they’re notĮxtreme quotes give the impression that the matter is so clear cut that no They abuse lax securities laws to gain large stakes in public companies….

filings looking for opportunities to demand a change in a company’s strategy or portfolio that will create a short-term profit without regard to the impact on the company’s long-term prospects.” US Senators Tammy Baldwin and Jeff Merkley proposed the Brokaw Act to crack down on activist hedge funds, claiming that “Activist hedge funds are leading the short-term charge in our economy. Prominent lawyer Marty Lipton argues that the long-term future of corporate America is being undermined “by a gaggle of activist hedge funds who troll through S.E.C. Hedge fund activism is a controversial topic.

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