BDC sponsor throws fundraising bash for Hillary Clinton

A leading sponsor of business development companies — alternative investments that could be hurt by the Department of Labor’s proposed fiduciary rule — threw a gala fundraiser for Democratic presidential candidate Hillary Clinton Wednesday night.
The fundraiser was sponsored by Franklin Square Capital Partners at its Philadelphia headquarters, where guests were entertained by rocker Jon Bon Jovi. The price to attend was $1,000 for individual “friends,” $2,700 for “families” who took photos with Ms. Clinton, and $27,000 for so-called “bundlers,” according to the Philadelphia Inquirer.
Mrs. Clinton has been a staunch supporter of the DOL fiduciary rule and has called on Congress to defeat efforts to defeat it. The DOL rule is “designed to protect hard-working families’ retirement savings,” she said in a statement.
With $17 billion in assets under management, Franklin Square is a leader in the illiquid or nontraded alternative investment industry, the products of which are sold mainly through independent broker-dealers. The firm is a sponsor of a series of nontraded business development companies, high risk and high commission investment vehicles that buy loans of small and mid-market private companies. Investors have increasingly turned to such investments as nontraded BDCs in order to generate income with interest rates at zero since the credit crisis.
(More: Will Franklin Square start a nontraded product price war with its cheaper BDC?
Alternative asset managers such as Franklin Square are likely to see sales suffer in the wake of the proposed DOL fiduciary rule as their investment products are illiquid and not always well-suited for retirees.
A Franklin Square spokesman, Marc Yaklofsky, said the firm declined to comment about the Clinton fundraiser or whether the firm had plans for similar events for Republican presidential candidates.
Franklin Square’s management has ties to Democratic Pennsylvania politics. The firm’s executive vice president for corporate development and public affairs, Mike Gerber, served eight years in the state’s House of Representatives and was also chairman of the Pennsylvania House Democratic Committee, according to his biography on the company’s website.
Senator and Democratic candidate Bernie Sanders took a swipe at Ms. Clinton for attending the Franklin Square fundraiser instead of campaigning in Iowa, which will kick off the presidential primaries with its caucus on Feb. 1. “Frankly, I would rather be here with you,” he said, according to The Des Moines Register.