Amid public outcry and under pressure from California pension officials, the owner of a gun maker whose weapon was used in the Connecticut school massacre put the company up for sale Tuesday.
Cerberus Capital Management said it would sell firearms conglomerate Freedom Group Inc. as momentum grew in Washington for new gun control legislation and a major retailer suspended sales of some weapons.
The decision came a day after CalSTRS announced it was reviewing its $625 million investment with Cerberus. Also Monday, State Treasurer Bill Lockyer called on CalSTRS and the California Public Employees' Retirement System to dump their investments in companies that make weapons that are banned in California, including the one used in Connecticut.
CalSTRS, the California State Teachers' Retirement System, owns 2.4 percent of Freedom Group through its stake in Cerberus holdings. It said it was pleased with Cerberus' decision.
"They're doing what we want them to do," said CalSTRS spokesman Ricardo Duran.
The gun industry, particularly Cerberus, increasingly found itself on the defensive Tuesday. Gun manufacturers' stock prices fell for a third straight day.
Dick's Sporting Goods suspended nationwide sales of "modern sporting rifles." In addition, the chain pulled all guns off the shelves at stores near Newtown, Conn., where 26 people, most of them young children, were shot at an elementary school by Adam Lanza, 20, who then shot and killed himself.
A spot check of gun stores in Sacramento showed no retailers pulling back on sales; a few said sales have increased because customers are worried about the push to step up gun control.
"Anytime you mention taking away something, that's going to cause a panic in people," said Josh Deaser, owner of Just Guns on Auburn Boulevard in Sacramento.
Political pressure for gun control was indeed growing. White House press secretary Jay Carney said President Barack Obama would support legislation restoring a ban on assault weapons and requiring background checks of buyers at gun shows. Obama also might back restrictions on high-capacity ammunition magazines.
Sen. Dianne Feinstein, D-Calif., has already said she'll introduce legislation to reinstate the assault-weapons ban, and more Democrats came out Tuesday in favor of restrictions on military-style firearms. Some Republicans in Congress now say they're open to discussing gun control.
Michigan's Republican Gov. Rick Snyder vetoed legislation that would allow concealed weapons in churches, schools and day care centers.
Meanwhile, the National Rifle Association, silent since the shootings, said in a statement that it was "prepared to offer meaningful contributions to help make sure this never happens again." It gave no indication what that might entail.
All in all, probably the most dramatic development of the day was Cerberus' decision to unload Freedom Group.
Cerberus is a diversified investor whose holdings include the Albertson's supermarket chain. It bought gunmakers Bushmaster in 2006 and Remington a year later, consolidating them under the banner Freedom Group, a $775 million-a-year conglomerate.
CalSTRS has invested $625 million with Cerberus since 2003, including $542 million into two Cerberus funds that control Freedom Group.
Duran said CalSTRS believes its calls to Cerberus "probably had an impact" on the firm's decision.
A spokesman for Cerberus, Peter Duda, had no comment on CalSTRS' possible influence. According to the Wall Street Journal, executives at Cerberus began talking about Freedom Group within hours of Friday's shooting but didn't make a decision until late Monday.
In its announcement, Cerberus said "we are investors, not statesmen or policy makers." But it added, "There are actions that we as a firm can take."
Stephen Feinberg, Cerberus' chief executive, was described by the Journal as an "avid hunter." His father lives in Newtown but wasn't involved in the decision, the paper said.
Other forces may have come into play. Former New York Gov. Eliot Spitzer urged investors to pressure Cerberus to unload Freedom Group. In California, Lockyer had urged CalSTRS and CalPERS to rid their portfolios of any company making guns outlawed in the state.
His spokesman, Tom Dresslar, said Lockyer was pleased that Cerberus is dumping Freedom Group, but the treasurer will still press the two pension funds to review their investment holdings. Lockyer is a board member of both.
Duran said CalSTRS is "checking our entire portfolio right now." Officials with CalPERS couldn't be reached for comment.
Over the years, CalSTRS and CalPERS have sold off various investments deemed socially irresponsible, including tobacco stocks and companies doing business with Iran.
In 2008, CalSTRS adopted 21 "risk factors" for screening new investments, including human rights and products that are "highly detrimental to human health." CalSTRS isn't prohibited from making investments that are flagged by those risk factors.
The risk factors were adopted after CalSTRS invested in Cerberus. "Moving forward, CalSTRS will work to ensure that all of our investments are taking these very important criteria into consideration," the pension fund said Tuesday.