Missouri treasurer joins fight over ‘woke’ investing rules

By St. Louis Post-Dispatch via My Courier-Tribune

JEFFERSON CITY — Secretary of State Jay Ashcroft gained an ally Tuesday in his legal fight over controversial new investing rules.

State Treasurer Vivek Malek, a fellow Republican, filed a brief in support of Ashcroft, who is being sued in federal court for attempting to limit the impact of environmental, social and governance (ESG) factors in investment decisions.

“Secretary Ashcroft’s rules are necessary,” Malek wrote. “The rules protect investors and aid in the prevention of fraud.”

Ashcroft, a candidate for governor, submitted the new regulation last year after Missouri lawmakers failed to ban state involvement in financial institutions that prioritize climate change or other socially driven investments.

The Securities Industry and Financial Markets Association filed a lawsuit to kill the rule, arguing the regulations violate the constitutional right to free speech by requiring brokers to stick to a script.

The trade group also says the rule fails to acknowledge that federal law already requires financial advisers to act in the best interest of their clients when providing personalized investment advice.

Malek’s brief, which was written by treasurer’s office attorney Douglas Shull, said Ashcroft’s rules were written based upon concerns about customer and investor protection.

“Where broker-dealers and investment advisors are permitted by silence to hide their usage of social or other nonfinancial objectives, the potential for fraud increases. At the same time, Secretary Ashcroft’s ability to protect Missouri investors and investigate fraud diminishes,” the brief notes.

Malek, who also is in the midst of an expensive campaign to win a full, four-year term as treasurer, told the court his office has a stake in the outcome because he is authorized to invest state funds.

Earlier this year Ashcroft was put on the hot seat for requesting more than $1 million to pay for a private law firm to handle the case. He hired the Kansas City-based Graves Garrett law firm on a no-bid contract after Attorney General Andrew Bailey’s office said it would need to have complete control over the case.

State payroll records show the politically connected firm has been paid $562,974 this year.

In March, U.S. District Judge Steven Bough ruled against a request by Graves Garrett lawyers to dismiss the case.

According to materials obtained by Documented, a progressive watchdog group, the language for the rule was relayed to Ashcroft by the Foundation for Government Accountability, a right-wing think tank based in Florida.

The FGA has a lobbying and political spending arm called the Opportunity Solutions Project. Its lobbyist in Missouri is political consultant James Harris, who is running Malek’s campaign.

Among the FGA’s initiatives in Missouri was a push to eliminate a state requirement for children under 16 to obtain official work permits before they can begin a job.