Stop Wall Street Looting Act
- Sponsor
- Sen. Warren, Elizabeth [D-MA]
- Committees
- Finance Committee (primary)
- Last action
- Sep 24, 2026
Bottom line
This bill seeks to hold private equity firms accountable for the financial health and worker welfare of their portfolio companies, shifting risk from workers and creditors back to fund managers and investors.
What it actually does
The "Stop Wall Street Looting Act" aims to fundamentally alter the private equity industry's operations by imposing joint and several liability on controlling private funds and their active interest holders for the liabilities of acquired firms. It restricts post-acquisition financial maneuvers, strengthens protections for workers and creditors in bankruptcy, closes tax loopholes benefiting private equity, enhances investor disclosure requirements, and introduces risk retention rules for securitized corporate debt. The bill also includes significant changes to labor law regarding striking workers.
Proponents argue
Supporters argue the bill protects workers, consumers, and communities from predatory private equity practices that often load companies with debt, strip assets, and lead to bankruptcies, while fund managers profit. They contend it ensures private funds have a genuine stake in the long-term success of their investments, rather than profiting from financial engineering at others' expense.
Opponents contend
Opponents would likely argue that these measures would stifle investment, particularly in struggling companies, by making private equity acquisitions too risky and costly. They might claim it would reduce capital available for business growth, job creation, and economic restructuring, ultimately harming the very workers and communities it purports to protect.
The bill is extensive and complex, requiring significant time for a thorough review, likely more than typically afforded for public and legislative scrutiny of such a wide-ranging measure.
Title I, Sec. 101
Joint and Several Liability for Controlling Private Funds
This provision amends the Investment Company Act of 1940 to make controlling private funds and their active interest holders jointly and severally liable for all liabilities of their target firms and any affiliates. This includes debts incurred during acquisition, civil monetary penalties, WARN Act violations, multiemployer pension plan withdrawal liability, and unfunded benefit liabilities to the Pension Benefit Guaranty Corporation (PBGC).
Supporters argue
Supporters argue this provision is crucial to prevent private equity firms from externalizing risks onto workers and creditors while shielding their own assets. It ensures fund managers have a direct financial stake in the long-term health of the companies they acquire.
Critics contend
Critics would contend that this broad liability would deter private equity investment, particularly in struggling companies, making it harder for such firms to find capital and potentially leading to more liquidations and job losses.
Tradeoffs
The provision balances the desire to hold private equity accountable for the financial health of their portfolio companies against concerns that increased liability could reduce investment and economic activity.
Title II, Sec. 201
Limitations on Post-Acquisition Financial Maneuvers and Outsourcing
This section prohibits target firms from making capital distributions (like dividends, buybacks) or reducing equity capital for a period of four years after a private fund acquires control. It also limits capital distributions to 10% of financial obligations for two years and prohibits plant closings or mass layoffs that relocate operations outside the United States.
Title II, Sec. 203
Surtax on Certain Amounts Received by Investment Firms
This section imposes a surtax on "applicable payments" (e.g., management fees, consulting fees, transaction fees, but excluding interest or stock distributions) received by an investment firm (applicable controlling entity) from a controlled target firm (applicable entity). The surtax rate is 100% minus the highest corporate or individual tax rate, effectively making these payments fully taxable at the highest marginal rate.
Title II, Sec. 209
Protections for Striking Workers
This section amends the National Labor Relations Act (NLRA) to make it an unfair labor practice for employers to permanently replace striking workers, discriminate against employees who supported a strike, or lockout employees to influence collective bargaining. It also prohibits employers from coercing employees to attend or participate in campaign activities unrelated to their job duties and requires employers to maintain current wages, hours, and terms of employment during collective bargaining.
Title III, Sec. 301-309
Enhanced Worker and Creditor Protections in Bankruptcy
This title significantly modifies bankruptcy law to prioritize workers. It increases the wage priority cap to $20,000 and removes the 180-day lookback period (Sec. 301). It grants administrative expense priority for severance pay and employee welfare benefit contributions (Sec. 302) and for back pay/penalties from labor law violations (Sec. 303). It severely restricts executive compensation and bonuses during bankruptcy (Sec. 304, 305, 306) and allows unpaid employee obligations to be recovered from secured collateral (Sec. 307). Courts must also give substantial weight to job preservation in asset sales (Sec. 309).
Title IV, Sec. 403
Special Rules for Partners Providing Investment Management Services (Carried Interest)
This section adds a new IRC Section 710, which recharacterizes "net capital gain" from "investment services partnership interests" (commonly known as carried interest) as ordinary income, rather than capital gains. It also treats gain on the disposition of such interests as ordinary income. This change significantly increases the tax rate on carried interest. It includes exceptions for actual capital contributions ("qualified capital interests") and subjects carried interest to self-employment tax.
Title V, Sec. 501
Disclosure of Fees and Returns for Private Funds
This provision mandates the SEC to issue rules requiring controlling private funds to annually report extensive information, including fund performance (gross and net of fees), debt levels, target firm debt-to-equity ratios, bankruptcies, equity ownership breakdown, aggregate fees collected, carried interest, various risk factors (including ESG), human capital management practices (demographics, diversity, harassment/safety incidents), political expenditures, and federal support received. All this information must be made publicly available.
Title VI, Sec. 601
Risk Retention Requirements for Securitization of Corporate Debt
This section amends Section 15G of the Securities Exchange Act of 1934 to include "managers of collateralized debt obligations" (CDOs) as securitizers subject to risk retention requirements. It clarifies that such securitizers must obtain and retain a portion of the credit risk for assets they securitize, even if they never held the underlying assets, either directly or through a wholly-owned affiliate.
Amends 11 U.S.C. 548 to create a presumption of insolvency for fraudulent transfer purposes if a transfer was made in connection with a change in control transaction or during a "protected period" (shorter of 15 years or until a public offering) to a control person, affiliate, or insider.
Title II, Sec. 202(b)
Why it matters:The technical nature of bankruptcy law amendments often means significant changes are embedded in statutory language that is not immediately accessible to a general audience. This is a substantively critical change to legal risk for private equity, and its technical phrasing might obscure its profound impact.
Case for: Proponents argue this is necessary to prevent private equity firms from extracting value from companies and leaving them insolvent, making it easier for creditors and workers to claw back funds. It addresses a perceived loophole that allowed firms to escape liability.
Case against: Opponents would argue this creates an unfair and overly broad presumption of insolvency, making legitimate transactions vulnerable to challenge and significantly increasing legal uncertainty and risk for investors in private equity.
Estimated impact: Significantly increases the legal risk for private equity firms in bankruptcy, potentially leading to more successful fraudulent transfer claims and altering how deals are structured.
Amends 11 U.S.C. 365(d) by striking paragraph (4), which removes the strict 120-day (with extensions) deadline for a trustee to assume or reject a lease of nonresidential real property in bankruptcy.
Title III, Sec. 311
Why it matters:The effect of striking this paragraph is a significant change for commercial landlords and tenants in bankruptcy, but it's not immediately obvious from the title or its placement. It might be seen as a tactical move to benefit certain types of debtors (e.g., retailers) in bankruptcy, which could face opposition from the real estate industry.
Case for: Proponents might argue it provides debtors with more flexibility and time to reorganize, potentially saving businesses and jobs by allowing them to renegotiate or assume leases more strategically without facing an arbitrary deadline.
Case against: Opponents (commercial landlords) would argue it creates significant uncertainty and financial strain, as they would be left in limbo regarding their property without a clear deadline for lease decisions, potentially hindering their own financial planning.
Estimated impact: Shifts leverage in commercial lease negotiations during bankruptcy, potentially benefiting debtors at the expense of landlords by removing a critical deadline.