A New York firm run by political figures, including ex-vice president Dan Quayle, is selling gun maker Freedom Group after one of its rifles is believed to have been used in the Newtown massacre.

A New York firm run by political figures, including ex-vice president Dan Quayle, is selling gun maker Freedom Group after one of its rifles is believed to have been used in the Newtown massacre.

"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," Cerberus said in a statement posted on its website.

The company called the shooting death of 26 people in Connecticut on Friday "a watershed moment".

"We believe that this decision allows us to meet our obligations to the investors whose interests we are entrusted to protect without being drawn into the national debate that is more properly pursued by those with the formal charter and public responsibility to do so," Cerberus said.

Just who might want to buy the gun maker from Cerberus, or at what price, is not clear. The Newtown massacre included the death of 20 children and was the deadliest such rampage in the US since 2007, when 33 people died in Blacksburg, Virginia.

Regulations 'may affect sales'

In previous regulatory filings, Freedom Group has said that "regulatory proposals, even if never enacted, may affect firearms or ammunition sales as a result of consumer perceptions." Such changes could restrict the types of guns Freedom Group could make or sell, or add costs to those processes.

Lawmakers have called for stricter gun-control laws. US Senator Dianne Feinstein has said she will introduce in the new Congress legislation to reinstate a federal ban on assault weapons that expired in 2004.

Cerberus Capital has $20bn under management and offices in New York, London and Asia, according to its website. The firm made its initial firearms investment six years ago when it bought the maker of the Bushmaster semi-automatic rifle. Officials say Adam Lanza used the weapon on 14 December during the massacre at Sandy Hook elementary school in Newtown, Connecticut.

Cerberus management team is run by eight investment bankers and former political figures including J Danforth Quayle, US vice-president from 1988 to 1992, who has been with the firm 13 years and is now chairman of Cerberus Global Investments. Former treasury secretary John W Snow joined Cerberus in 2006 and is chairman of Cerberus Capital Management LP.

Shares slump

Freedom Group is the largest US manufacturer of guns and ammunition, employing 3,100 in nine plants. The investment company had planned to sell company shares in October 2009 but pulled the offering in April 2011 when the gun market slowed and Freedom Group Chief Executive Officer Theodore Torbeck resigned.

Shares in weapons manufacturers have slumped since the massacre on Friday. Smith & Wesson Holding Corp. fell 9.4 per cent at the opening of trade in New York today, and Sturm Ruger & Co fell 7.5 per cent.

The California State Teachers' Retirement System, which has $751m overseen by Cerberus, said it was reviewing the investment, Ricardo Duran, a spokesman for the public pension fund manager, said in an email to Bloomberg.

Calsters, with $154.8bn in assets as of Oct. 31, is the second-largest US pension fund after the California Public Employees' Retirement System with $241bn.

Cerberus, California's teachers, and a watershed event

In Greek legend, Cerberus is a mythical three-headed dog guarding the gates to the entrance of the Underworld, writes Channel 4 News Business Correspondent Siobhan Kennedy. It is a name not lost on the opponents of the New York private equity firm, who accuse Cerberus of using its sharp teeth to snap up businesses on the cheap, aggressively wring out costs and sell them for a hefty profit.

The world over, private equity firms are not known for their ethical investments. So long as there's money to be had, private equity is happy to pile in. If they cause misery in their wake, well, that's just business.

So Cerberus's move to sell the gun maker Freedom is nothing short of spectacular. But here's the rub: the private equity industry can't exist without its investors and as investors go, there's few bigger - or more influential - than Calstrs. Standing for the California State Teachers' Retirement System, Calstrs effectively represents the pot of all teachers' pension contributions in the state of California. That makes it the largest teachers' fund and the second largest pension fund in the whole of the US.

Cerberus's move to sell the gun maker Freedom is nothing short of spectacular.

In short, that's lot of cash and a lot of influence.

So when Calstrs announces it is reviewing its investments with Cerberus in light of last weeks' shooting in Connecticut, watch that three-headed dog cower.

For less than 24 hours later Cerberus issues its own statement announcing its intention to sell its holding in Freedom - declaring Friday's atrocities in Newtown a "watershed event".

Freedom manufactures the Bushmaster rifle, a civilian version of the military M-16, which Adam Lanza, the shooter, is thought to have used to kill six teachers and 20 children. Cerberus said it would return the money from the sale to its investors - Californian teachers chief among them.

Selling Freedom seems to be indicative of a real sense of change around gun control laws.

That the pension fund for Californian teachers no longer wants to be associated with the gun maker should come as no surprise. That they've used their weight to force Cerberus to sell the business is highly unusual.

But let's not get over-excited. Selling Freedom doesn't amount to the end of the business, which is profitable and growing. But it does seem to be indicative of a real sense of change around gun control laws that's sweeping across the US.

Freedom will pass into new owner's hands for sure. But the fact that its current owners - one of America's biggest and most high profile private equity firms - wants out, is the surest sign yet that change is afoot.