Via Reuter | Svea Herbst-Bayliss
BOSTON (Reuters) – A labor union representing American teachers on Friday urged pension funds to cut their exposure to investment firms that have funneled millions of dollars into private prisons, saying the companies are getting rich on the U.S. government’s practice of separating migrant families.
The American Federation of Teachers, which influences over $1 trillion in public-teacher pension plans, published a report identifying more than two dozen firms that bet on jail operators CoreCivic Inc and GEO Group Inc and defense contractor General Dynamics Corp, which has contracts with migrant shelters. It sent the report to pensions around the country, warning such investments could be hazardous.
Shares of CoreCivic, formerly Corrections Corporation of America, and GEO Group began climbing after Donald Trump was elected U.S. president in November 2016. They have risen more in the last months as the Trump administration began prosecuting people who crossed the border illegally. Many were put into facilities run by these companies, and thousands of children were separated from their parents.
In an attachment to the report, the teachers federation names the biggest investors in private prisons, including investment firms Hotchkis & Wiley and Geode Capital Management, as well as hedge funds D.E. Shaw, Millennium Management and Renaissance Technologies. Some of these firms make trading decisions mainly using computer models instead of conducting fundamental research on companies.
“Hedge funds that invest in private prisons are not only profiting off a broken justice system and abetting the administration’s policies of family separation … They are also making a risky bet on an industry rightfully under siege,” American Federation of Teachers President Randi Weingarten said.
The Geo Group released a statement blasting the union’s stance as “outrageous and based on malicious lies … Our company has never managed facilities that house unaccompanied minors … nor have we ever provided any other services for that purpose.”
Amanda Gilchrist, a spokeswoman for CoreCivic, said the company helps the government “provide solutions for overcrowded and potentially unsafe conditions.”
General Dynamics spokeswoman Lucy Ryan said the company provided support services but “had no role in the separation of children and families.”
Spokespeople for the fund firms either declined to comment or did not return messages seeking comment.
CoreCivic’s stock price has climbed 22.6 percent in the last three months while GEO Group’s gain was 7.14 percent in the same time.
Several prominent pension funds, including the California State Teachers Retirement System and the Chicago Teachers Pension Fund, are evaluating their investments in private prisons. Last year New York City pension funds were the first to fully divest from the private prison industry, the report said.
The American Federation of Teachers has long been critical of hedge funds, calling them too expensive and criticizing their lackluster returns in previous reports.