Farallon Capital Management, a hedge fund that invests a portion of Yale’s endowment, has sold about two thirds of its stock in a private prison company that campus activists have criticized for alleged human rights abuses.
According to an analysis of public filings released Tuesday by the Graduate Employees and Students Organization, Yale’s indirect holdings in Corrections Corporation of America decreased from $1.5 million to approximately $500,000 in the fiscal quarter ended Dec. 31. GESO activists said their on-campus campaign against CCA likely influenced the decision, but University officials denied any change to their divestment policy.
GESO chair Melissa Mason GRD ’08 characterized Farallon’s move as a partial divestment that should be followed up with a new formal policy.
“It’s clear that there has been a step in a right direction, with Yale dropping two thirds of its share,” Mason said. “Now Yale needs to make an official statement to finish off the divestment.”
In February, the University announced that it will exclude companies doing business in Sudan from its portfolio. GESO has argued that a similar divestment policy should be taken against CCA, namely because CCA has lobbied to increase prison sentences. But administration officials have maintained that CCA does not meet the criteria for divestment, and said the University had nothing to do with Farallon’s action.
Yale spokesman Tom Conroy said in an e-mail that divestment from CCA has not been recommended by the Yale Corporation, a decision which would have been announced publicly.
“Yale has not made a decision to divest,” Conroy said. “If the Yale Corporation had made such a formal decision, we would have announced it, as the University did recently regarding the Sudan.”
GESO spokesman Evan Cobb GRD ’07 said Farallon also had economic reasons to sell the stock. The shares were worth about $30 each when the fund bought them, but were valued at $46 when they were sold, Cobb said.
Still, GESO representatives said the pressure they have placed on Yale and other universities probably had an impact on Farallon’s sale of stock. GESO has held rallies on campus, and collected signatures from approximately 600 graduate students and 50 professors in favor or divestment.
Farallon invests about $500 million of Yale’s $15.2 billion endowment, Mason said, so the attitude at Yale impacts its portfolio.
“This has become a national campaign involving about 10 schools that use Farallon as an investment fund,” she said. “I think the pressure has been working.”
University investment in CCA — which benefits financially from increased numbers of prisoners with longer prison terms — is undesirable, Mason said.
“I don’t think that this university should be investing in a corporation that is in the business of incarceration, that sees an interest in seeing a greater number of people being incarcerated in this country,” she said.
CCA representatives did not return calls for comment on Tuesday.
Yale’s Advisory Committee on Investor Responsibility decided in December — following the release of a GESO report on abuse in prisons — that Yale’s investment in the government-regulated CCA did not constitute a “grave social injury,” the University’s standard for divestment. This standard was set forth in “The Ethical Investor,” the book of investment guidelines adopted by the committee in 1972.
GESO will have the opportunity to present its case again at the committee’s annual open meeting, currently slated for March 27.
CCA operates 63 prisons in 19 states and the District of Columbia. It manages 62,000 of the more than 1 million people incarcerated in the United States.