Activist Investors Are Coming After New Yorkers’ Safe Investments. Here’s How We Can Stop Them.

by Pastor Michael Battle

For generations, millions of middle-class New Yorkers and other Americans have used a type of investment vehicle called closed-end funds (CEFs) to secure their financial future. 

A close relative of better-known mutual funds and exchange-traded funds (ETFs), CEFs often deliver more reliable distribution income than other funds as a result of their holdings. This makes them very popular with seniors and folks planning for retirement. 

However, all of the benefits CEFs provide are facing a grave threat.  Activist investors on Wall Street have set their sights on these funds, planning hostile takeovers to enrich themselves at the expense of the regular Americans who have invested in the fund, and it’s time for New Yorkers to pay attention.

These activist investors have billion-dollar bankrolls and have discovered they can buy up shares of a CEF and wage a proxy campaign to change the adviser. Surprising no one, they appoint their own firm as the CEF’s adviser, completely shift the investment strategy to riskier assets, and then sell their position for a quick profit while continuing to earn management fees, leaving American retirees holding risky assets they never intended to have when they originally invested in the fund.

These billionaire activist investors are using a loophole in the Investment Company Act – a law passed in the wake of the Great Depression to protect investors and prevent fraud – when they buy up shares and orchestrate these hostile takeovers of CEF boards, the fund’s governing body. 

Suddenly, American retirees who invested in the CEF because it provided reliable distribution income from safe assets may now be holding a highly speculative fund made up of assets like crypto and high-risk corporations. In many cases, these activist investors have taken control and made the changes before regular investors even realize what’s happening. Even worse, sometimes a CEF will be liquidated entirely as a result of an activist’s takeover, eliminating the income stream original investors were expecting to have for their retirement or other savings purposes.

Alarmingly, the billionaire activists are using this strategy increasingly often, which is why New Yorkers must start paying attention now and speaking up. Income New Yorkers were counting on in retirement may be at stake. On top of this, now fewer CEFs are being created in part because investment managers see activists preying on these funds. With fewer CEFs available for retirees and middle-class Americans to safely invest in, regular people are being left without this useful option. 

While some may argue these hostile takeovers are simply the free market at work, that argument fails to recognize the legal intent of the Investment Company Act. For more than 80 years, the Investment Company Act has protected investors and ensured funds serve the best interests of shareholders. The law has allowed for the growth of CEFs, mutual funds, and ETFs that have generated billions of dollars in wealth for Americans saving for their retirement, college for their kids, or a downpayment on a new home. If activist investors with hostile intentions are allowed to exploit loopholes in the law to enrich themselves instead of long-term shareholders’ interests, millions of CEF investors will continue to suffer.

It’s time for robust action to protect American retirees who invested in CEFs long before activist investors started to prey on these funds. Thankfully, New York Congressman Gregory Meeks has proposed a bipartisan bill to protect CEF investors. His Increasing Investor Opportunities Act, would prevent hedge fund managers from exploiting the loopholes they use to take over CEFs, and it would expand opportunities for retail investors to participate in investment opportunities. With both Democrats and Republicans behind the bill, this should be a no brainer.

It’s time for Congress to help investors and retirees stand up to hedge fund bullies. New Yorkers deserve some peace of mind that rich activists won’t take over their investments and exploit them for personal gain. Passing the Increasing Investor Opportunities Act is the best way to do that.

Jiha again using the budget as a political weapon

In a hours-long budget meeting with councilmembers Monday, Adams’ budget director, Jacques Jiha, made some sweeping statements about the city’s bottom line.

The headlines from that meeting this week focused on Jiha’s assessment that closing Rikers Island jail by 2027, as mandated by law, is “not going to happen.” In his testimony on the city’s budget, Jiha claimed that the mandate to close Rikers and make way for borough-based jails throughout the city was interfering with his ability to provide space in the budget for popular infrastructure plans and city services. The comptroller disagrees with that assessment. Wait a minute, haven’t we heard this before?

Oh! That’s right! This fall, Jiha told us a $6.5 billion deficit, largely caused by asylum seekers, was responsible for closing library services and slashing education spending — only to quietly correct the record when discovering the city actually has a $2.8 billion surplus. In the same meeting Monday, Jiha told city council that the Biden administration has not delivered federal funding promised to the city when in fact, according to a federal official, it is the mayor’s office dragging its feet on the necessary paperwork holding up the money.

Jail reform and asylum seekers are easy scapegoats for austerity concerns — especially when you imagine billions of dollars in budget deficits to fuel it. We all know Adams is not a fan of the Rikers closure, he has publicly lambasted the plan and cast doubt on the jail’s documented inhumane and deadly conditions. But the law is the law and the mayor has a mandate to follow through on his duties, regardless of his feelings on the matter.

As for Jiha, we advise he take another stab at his assessment of the budget now that he’s got almost $10 billion more that we thought on hand and, in the words of his boss:

“Stay focused. No distractions. And grind.”

Electeds Need to Take Action to Protect Retail Workers

On Tuesday, retail workers, members of the Retail, Wholesale and Department Store Union (RWDSU) and allies rallied in Albany to push for the passage of the Retail Worker Safety Act. The bill, introduced by Sen. Jessica Ramos of Jackson Heights, seeks to protect workers from violent and dangerous incidents at retail stores.

Created in response to heightened rates of violence in stores across New York City and State since the pandemic — ranging from verbal harassment to threats to racially motivated assaults to shootings — the bill would create sensible measures to keep the workers who keep our city running every day safe. 

Retail employers with 10 employees or more would be required to create workplace violence prevention programs, including simple measures such as improving lighting, employee training, educating workers on de-escalation tactics and establishing emergency procedures, such as during active shooter drills. Employers would also be required to document any incidents of workplace violence and report them to a public database. Additionally, larger chain retail stores (those with 50 or more workers nationwide) would have to install panic buttons and some would be required to hire security guards.

As conversations of quality of life crime and shoplifting dominate political talking points, it’s time for politicians to take real action to support those most immediately affected by these incidents. The NYPD is not a private security force for large retail corporations and cannot be expected to operate as taxpayer-funded guards for giant chain retailers. Those employers need to start putting up the resources to take the most basic measures necessary to keep their employees safe in the workplace. It’s common sense, Albany needs to pass the Retail Worker Safety Act now!

In Our Opinion: Local news is not a competition

Two weekends ago, Councilman Bob Holden honored the late, great Maureen Walthers, the long-time matriarch of the Ridgewood Times, with a street co-naming on Woodbine Street in Ridgewood, where she called home.

Walthers served as the first female editor of the Ridgewood Times, as well as its executive vice president and co-owner.

She went on to purchase the paper in 1983, and eventually launched the Times Newsweekly, extending to other parts of Queens.

Her contributions to the neighborhood also include her involvement in Community Board 5 and Greater Ridgewood Restoration Corporation, her efforts to preserve and landmark the Onderdonk House and co-founding the Greater Ridgewood Historical Society — among many other commendable endeavors.

Walthers passed away in 2020 after an illness, and dozens of people gathered on Aug. 27 to celebrate her work as a journalist and civic leader, and reminisce on her kind, witty personality.

But what should have been a wholesome event to commemorate her life and legacy quickly turned sour when speakers on the mic made strange, competitive remarks pitting the Ridgewood Times and other local papers against each other.

“The Ridgewood Times at that time was the newspaper. The layout of the Ridgewood Times was again, the most complete, the most professional, and it rivaled actually many, many daily newspapers,” Holden said.

Sheesh, Bob. That’s a perfectly fine opinion to have, but to say it on the mic in front of a crowd of people, which included reporters from said papers, is a bit awkward.

Many of Walthers’ close friends and loved ones took turns on the mic to reminisce. The comments got weirder as the ceremony went on.

Outgoing Assemblywoman Cathy Nolan said that local journalism should be about what Walthers exemplified: “fearless, fun and community-focused,” and that although other papers “try,” she misses what Walthers brought to the table.

Another community resident who’s known Walthers since the ‘70s even went as far as suggesting that other local papers misrepresent people and events, and the Ridgewood Times always got it right.

“Any time you wanted to put something in [the Ridgewood Times], *boom* it was in. And it was always put in a great light,” he said. “Those of you who might’ve been portrayed in other papers or in other media and say, ‘That’s not really what happened,’ but with the Ridgewood Times, it really was what happened.”

News flash: it is not a journalist’s job to portray people and events in a “positive light,” it’s our job to seek the truth — the good, the bad and the ugly — and report it to our readers.

Any journalist worth their title will promptly make a correction or retraction if something was somehow taken out of context or misinterpreted in any way. Reach out to us and start a dialogue if that’s ever the case.

The Ridgewood Times has done and continues to do admirable work for the community, and Maureen Walthers’ work in the newspaper business serves as inspiration for all young reporters, especially young women.

But for elected officials and community leaders to make her event a competition is a blatant slap in the face to reporters at other newspapers who work tirelessly to provide readers with relevant local news.

In the same way that politicians represent a community whether people like it or not, established local newspapers influence and serve thousands of readers in the community —  whether politicians like it or not.

We should all aim to work together to provide the most factual, up-to-date news to our communities.

The remainder of Walthers’ street co-naming event was lovely, revealing fond memories of her along with a shiny new street sign that reads, “Maureen Walthers Way.”

Based on Maureen’s personality and life philosophy, she wouldn’t have appreciated the needless, subtle digs at other papers. We knew her well. She was a true pioneer in our industry and she believed as we do, in the growth and prosperity of our communities. Local papers are a strength of the neighborhood.

Her work at the Ridgewood Times speaks for itself.

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