Time to restrict 'Private' Equity?

Once every so often the Wall Street Journal gives space to a voice that does not toe the party line. So it was refreshing to read an article that chimes with our view on the Private Equity business. We always argue that the name Private Equity is first of all a misnomer, it is not 'private' at all as most money comes from the public, mostly through fiduciaries like pension fund managers. The performance and fee structure is highly non-transparent (at least to those who are the real investors and risk takers), maybe that is the reason why the business calls itself 'private'. The PE model also allows compensation for the chosen few at the top of the pyramid to be hidden from scrutiny. There is no justification for this as the investor pool is roughly the same as in public equity. Taking control of whole businesses is also not the idea behind mutual investing on a fiduciary basis. This type of activity can be perfectly executed in the form of an ordinary company - private or listed - and the business should be taxed and regulated on the same basis. Only the lack of organisation on the part of public shareholders, investors and pensioners has allowed the development of the excesses that plague the private equity model. The economy ticked along perfectly well before the advent of the 'Barbarians' and will continue to do so long after this abuse has been checked. It is high time that the fiduciaries which channel easy pickings to the few at the expense of the many take their responsibilities seriously.