Newtown, Guns and Wall Street: Is It Just About the Money?

by The Wall Street Journal  |  published on December 21, 2012

At first glance, Cerberus Capital Management LP’s decision to dump Freedom Group, maker of the semiautomatic rifle used in the Newton, Conn., massacre, was purely economic.

“We do 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,” the company wrote in a statement.

The company added. “It is not our role to take positions, or attempt to shape or influence the gun control policy debate.”

As if to underscore the cold logic of Cerberus in making its decision, reporting showed Cerberus surrendered only after pension funds pressured the private-equity fund and founder Stephen Feinberg.

To some outsiders, Cerberus’s move wasn’t enough. The message seemed to be: “This is about the money.” It was too unfeeling. It might have been the right move, but it was being made for the wrong reason.

Even if that was the case, Cerberus’s dumping of the maker of the Bushmaster wasn’t ruthless. It is free-market capitalism at its finest: a company responding to market forces, its investors, customers and owners.

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