A group of high-profile investors on Monday encouraged lawmakers to support legislation aimed at forcing anonymously owned companies to be transparent about their ownership.
The letter, written by 22 investors representing more than $505 billion in assets under management, called for legislators to support the Incorporation Transparency and Law Enforcement Assistance Act, a piece of legislation that was referred to House and Senate committees in February.
The act would require disclosures about “the real people who own or control” the companies, and would “help provide law enforcement with the tools needed to fight crime and the criminals that rely on the anonymity of American companies.”
The letter argues that current law allows companies to be “created anonymously” in all 50 states, and said that the practice “effectively [removes] personal responsibility or accountability from the corporate equation.” As a result, the letter said, criminals have avoided taxes, funded terrorist activity, and benefited from human, drug and weapon trafficking.
“There is a real cost of corruption to investors, shareholders, small business, consumers and the general public, including the creation of a corporate culture that tolerates unethical behavior,” the letter said. It called the inability to identify ownership information a “serious red flag” that “can erode democratic institutions, rule of law and human rights protections.”
The letter said addressing the problem will lead to “more competitive markets, more stable financial systems and more sustainable development,” and ended with a final push to lawmakers to support a measure that will “protect the millions of investors whose success is predicated upon the existence of transparent and accountable institutions.”
