Mississippi state capitol of Jackson.
BlackRock’s growing headache over its ESG investing strategies just got worse.
On March 26, the Securities Division of the Mississippi Secretary of State’s office hit the money manager with a summary cease and desist order stemming from purported untrue statements that BlackRock made about both its ESG and non-ESG funds.
ESG funds are those that incorporate environmental, social and governance factors into their investment decision-making.
In its administrative order, the Securities Division chastised BlackRock for the alleged deceptive marketing of its ESG funds, saying claims about ESG funds driving better financial returns are untrue.
It also claims that BlackRock’s non-ESG funds are not in fact managed for the sole purpose of investors’ financial return without regard to ESG criteria because “BlackRock has committed to use all assets under management to advance the environmental agenda of reducing carbon emissions to net zero.”
The administrative order to cease and desist the alleged fraudulent statements also includes a notice of intent to impose an administrative penalty equal to $25,000 per each of the thousands of potential violations uncovered.
“We operate in one of the most highly regulated industries in the country and are committed to following the law in every respect,” BlackRock said in a statement, adding that it is bound to invest consistent with clients’ choices, their financial interests and applicable law.
“Our only agenda is maximizing risk-adjusted returns for the funds our clients choose to invest in,” it said.
The administrative order comes as BlackRock fends off attacks from other Republican-led states over ESG investing. In Oklahoma, for example, BlackRock was among six financial firms that were blacklisted for allegedly boycotting the oil and gas industry by applying ESG principles in their investment funds.
The Securities Division is calling on BlackRock to immediately stop making fraudulent statements and to stop offering securities in or from Mississippi through “an offer containing a statement that is materially misleading or otherwise likely to deceive the public.”
BlackRock has 30 days to contest the allegations.
The administrative order was filed against BlackRock, BlackRock Investments, BlackRock Advisors, BlackRock Fund Advisors and iShares Trust.
