US backlash grows over weapons sales

 
Michael Bow
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WALL Street investors yesterday moved to distance themselves from America’s powerful gun industry amid growing public anger following the deadly shooting at Sandy Hook elementary school in Connecticut.

In a pivotal move throwing Wall Street financiers into the heart of the US gun debate, private equity titan Cerberus Capital Management said it would sell the company that makes the Bushmaster Assault rifle, thought to have been used in Friday’s shooting in Newtown, Connecticut.

Cerberus, a private equity firm led by Stephen Feinberg, whose father is believed to live in the tight-knit Newtown community, owns a 95 per cent majority stake in Freedom Group, which makes the rifle.

Yesterday it said it would ditch the company “immediately” following the shooting.

“It is not our role to take positions, or attempt to shape or influence the gun control policy debate,” it said.

“There are, however, actions that we as a firm can take. Accordingly, we have determined to immediately engage in a formal process to sell our investment in Freedom Group.”

It comes after one of America’s most powerful investors and a key Cerberus backer, the California State Teachers’ Retirement System, said it was reviewing all its investments in gun companies. It has a $750m (£461m) stake in Cerberus.

California state treasurer Bill Lockyer has also called on the influential California Public Employees’ Retirement System to take another look at firearm investments following the shootings. New York State’s public pension fund is also reviewing its investment in firearms manufacturers following the tragedy.

Friday’s deadly attack at Sandy Hook school left 20 small children and six adults dead, prompting the US to ask searching questions about its relationship with guns.

Supermarket giants Walmart and Dick’s Sporting Goods have subsequently pulled the Bushmaster rifle from sale on their websites and some stores around the Newtown area. Shares in publicly listed gunmakers and retailers also plunged yesterday.

Gunmaker Smith & Wesson dropped 10 per cent on the Nasdaq exchange, while Sturm, Ruger & Co fell around 7.7 per cent on the New York Stock Exchange. Publicly listed gun retailer Cabela’s fell six per cent.

The National Rifle Association, the powerful US lobby group, last night said it would offer “meaningful contributions” to policy reform following the public outcry over the shootings. President Barack Obama is currently mulling reinstating a ban on assault weapons in light of the tragedy.