New York City pension funds and Platinum Equity LLC are hammering out the details of a provision to let the funds opt out of future investments in the prison services industry, according to people familiar with the matter.
The New York City Comptroller’s office is working to expand existing restrictions barring investment in private prison operators to now include companies providing services to correctional facilities, said the people, who asked not to be named because the discussions are private.
The decision comes amid calls on private equity firms — and the pension funds that hand them billions of dollars to manage — to avoid investing in companies that profit from mass incarceration, including some health care and telecommunications providers that primarily serve prisons.
Among the buyout firms that have come under scrutiny is Beverly Hills-based Platinum, which in 2017 acquired Securus Technologies Inc., a inmate phones services provider that has been criticized for charging as much as $25 for a 15-minute phone call.
Officials for the NYC funds and Platinum discussed Securus and the possibility of opting out of more prison-related investments at a May 15 meeting, the people said. Each of the city’s five pension funds will decide whether to include the new restrictions in side-letters that regulate the terms of new commitments to Platinum.
“This could be the broadest action we see targeting investments in the prison industrial complex and the first in the private equity space,” said Bianca Tylek, the founder and executive director of Worth Rises, a non-profit that advocates against the commercialization of the criminal justice system.
Representatives for the office of New York City Comptroller Scott Stringer, who serves as investment adviser for the five funds, and for Platinum declined to comment.
Platinum, which is currently seeking commitments for its fifth flagship buyout fund, acknowledged in a letter to investors earlier this year that Securus engaged in practices that put the interest of correctional facilities above those of inmates and has pledged to transform the company.
The NYC pension system is one of the largest investors in the Platinum fund that owns Securus, according to data compiled by Bloomberg from publicly available sources. The system has around $200 billion of retirement assets under management on behalf of teachers, police, fire and other city employees.
Last month, the Pennsylvania teachers pension fund postponed a decision on whether to invest more money with the buyout firm after two advocacy groups spoke against the Securus investment at a public board meeting. The fund is a major investor in Platinum funds, and is now seeking to gather more information.
Two years ago, New York City became the first major public pension system to fully divest from private prison companies such as GEO Group and CoreCivic, Inc. out of concerns about “alleged human rights abuses across the private prison industry,” the Comptroller’s office said in a press release at the time.