NEW YORK -- A prominent U.S. private equity firm will sell its stake in a firearms company that produced a rifle believed to have been used in last week's school shooting in Newtown, Connecticut, calling the attack a "watershed event" in the national debate on gun control.
Cerberus Capital Management makes investments on behalf of clients that include the pension plans of public workers -- including teachers -- as well as other institutions and individuals.
Cerberus said it is selling its stake in the Freedom Group, which makes the Bushmaster rifle. The gunman, 20-year-old Adam Lanza, is believed to have used a .223-calibre Bushmaster AR-15 rifle in Friday's attack, which killed 26 people, 20 of them children ages 6 and 7.
It was one of the worst mass shootings in U.S history. No motive has yet been found. The New York-based Cerberus said it was deeply saddened by the shooting.
"We are investors, not statesmen or policy makers," the company said in a statement. "It is not our role to take positions, or attempt to shape or influence the gun control policy debate. That is the job of our federal and state legislators."
A representative for Freedom Group, a major firearms manufacturer which also produces Remington Arms, could not be immediately reached for comment.
The AR-15 rifle is a civilian version of the military's M-16. Versions of the AR-15 were outlawed in the U.S. under the 1994 assault weapons ban. That law expired in 2004, and Congress failed to renew it under immense pressure from the gun lobby.
It appeared that investors as a whole were ridding themselves of shares in firearms makers this week.
Shares of Sturm, Ruger & Co. plunged nearly 7 per cent in early trading Tuesdsay. Shares of Smith & Wesson Holding Corp. fell more than 9 per cent.
The Cerberus announcement comes one day after the California State Teachers Retirement System, a large pension fund, told The Wall Street Journal that it was reviewing its $500 million investment commitment to Cerberus because of the firm's stake in Freedom Group.
A representative for the California State Teachers Retirement System could not be immediately reached for comment Tuesday.
Cerberus affiliates made an investment in Freedom Group in 2006. The firm said that Freedom Group does not sell weapons or ammunition directly to consumers, and that it does not believe that "Freedom Group or any single company or individual can prevent senseless violence or the illegal use or procurement of firearms and ammunition."
Money made from the Freedom Group sale will be returned to its investors, Cerberus said.
