Indiana Secretary of State claims BlackRock deceives Hoosier investors

(The Center Square) – Indiana is going after the world’s largest asset-managing firm, alleging funds it manages with non-environmental, social and governance policies are, in fact, using those guidelines that have been criticized by conservative lawmakers in recent years.

Recently, Indiana Secretary of State Diego Morales issued a cease-and-desist order to BlackRock Inc., claiming the firm managing $10.6 trillion in assets globally has deceived clients. Morales’ office includes the Securities Division, which oversees firms licensed to offer investment services to Hoosiers.

Many companies have implemented such policies, often referred to as ESG, in an effort to demonstrate they are utilizing sustainable practices. However, those policies often put other goals ahead of profit, and that can impact gains made by those who have contributed to investment funds that include shares of those businesses.

In a six-paragraph statement, the Secretary of State’s office alleged BlackRock “repeatedly made false and misleading statements” to investors in presenting funds. The state claims BlackRock representatives have told clients ESG funds would produce better long-term returns with scant proof, if any, to back up that assertion.

Also, Morales’ office claims that funds touted by BlackRock as “non-ESG” actually do include investments in companies following those policies.

“BlackRock has issued several statements and actions in commitment of using all assets under its management to incorporate ESG considerations, including advancing the environmental goals of net zero carbon emissions,” the statement read.

The cease-and-desist letter comes two months after Indiana Treasurer Daniel Elliott released a report detailing how BlackRock’s ESG practices have “indirectly” affected state pension programs that cover tens of thousands of active and retired Indiana public employees.

Indiana is not the only state that has taken action against an investment firm. In late March, Mississippi Secretary of State Michael Watson issued a similar order claiming BlackRock has committed securities fraud.

Consumers’ Research, a nonprofit organization that seeks to inform consumers about policies, products and services available to them, praised Morales for going after BlackRock. Executive Director Will Hild said in a statement that BlackRock CEO Larry Fink’s deceptive practices have hurt investor returns for years.

“Secretary of State Morales is doing the right thing. He’s protecting his constituents from Fink’s unscrupulous business practices, and Indiana will be better for it. I hope more states follow his lead,” Hild said.