Secretary of State Jay Ashcroft issued a rule on June 1 that requires broker-dealers to obtain consent from customers to purchase or sell an investment product based on social or other nonfinancial objectives, such as combating climate change, Reuters reported. Ashcroft acted after Republican lawmakers failed to pass a similar measure during the state’s legislative session amid infighting over which bills should be prioritized.
Republican politicians this year proposed some 165 pieces of legislation in 37 states to counter ESG investment practices. But of those proposals, only 22 anti-ESG laws in 16 states were approved this year. Concerns over costs, bureaucracy and economic fallout led to bills stalling or passing in weakened form even in so-called red states, where Republicans dominate state government.
Several corporate attorneys said other Republican officials may adopt Ashcroft’s playbook and act on their own. “In the absence of legislative action, which can be hard to achieve, you’ll see a migration to action via executive or administrative orders and attorney general opinions,” said Beth I.Z. Boland, a securities litigator for Foley & Lardner in Boston.
Ashcroft is running for governor of Missouri on a conservative platform, including a vow in a campaign video to protect residents from banks that focus on what he called woke politics. He said wanted to take a different tack than in other states with new Republican-backed restrictions such as barring certain companies from managing public money.
“We think we’ve taken a novel approach that protects people but doesn’t preclude them from deciding what to do with their own money,” he said about the rule he implemented, which is set to take effect at the end of July.
Missouri is one of 10 states whose secretaries of state have jurisdiction over securities, according to the nonpartisan national association of these officials, who are often known for overseeing elections and business licenses.
–Alan Goforth | Metro Voice