Missouri Secretary of State Jay Ashcroft
JEFFERSON CITY — Although he leaves office in January, Missouri Secretary of State Jay Ashcroft is not giving up his attempt to rein in so-called “woke politics” when it comes to investment regulations.
In a series of emergency rules filed last week, the Republican waded back into an issue that has already cost Missouri taxpayers more than $1.6 million in legal fees after a previous set of regulations floated by Ashcroft was struck down by a federal judge in August as being politically motivated.
In calling for the latest round of changes, Ashcroft said there is “an immediate danger to the public welfare” if there are not guidelines in place cautioning people about investment firms that use environmental, social and governance principles.
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“The Secretary of State is filing this rule in order to prevent confusion and uncertainty in the industry by clarifying what constitutes fraudulent practices by investment advisors and representatives,” the rule notes.
Ashcroft issued the now-invalid rules in 2023 in the run-up to his campaign for governor as a way to bolster his conservative credentials when it comes to concerns about climate change and diversity, equity and inclusion.
The move followed an earlier attempt to put public libraries in a spotlight over a conservative concern about children potentially being exposed to sexually explicit material.
The investment rules required professionals to get written consent from customers before incorporating “a social objective or other nonfinancial objective” into decisions about buying and selling securities.
During his unsuccessful campaign for the Republican gubernatorial nomination, Ashcroft railed about the alleged dangers of investing based on the environmental or social factors.
“ESG investing opposes fossil fuels, pushes unionization of private companies, pushes radical racial and gender equity over merit, and flexes their influence over who is chosen to sit on corporate boards,” his campaign website said.
But, a national group representing the securities industry won a lawsuit after a judge said the first set of regulations infringed on the free speech rights of investment professionals and are preempted by federal law.
Missouri’s rule is part of a broader push by Republicans to limit the consideration of ESG factors by businesses and investors, including employee retirement plans.
Former President Donald Trump’s administration, for example, barred retirement plans from considering “non-pecuniary” factors in deciding where to invest pension funds. The rule was eliminated by President Joe Biden.
In February, Democrats put Ashcroft on the hot seat for hiring a politically connected private law firm to defend the lawsuit.
“I’m just tired of wasting our taxpayer dollars on legal fees for your campaign,” Rep. Peter Merideth, D-St. Louis, said at the time.
The revamped version of the rules now require investment professionals to get written consent from investors that the products they are selling incorporate a social objective “or other nonfinancial objective into discretionary investment decisions.”
“This rule identifies practices in the investment adviser industry that are generally associated with acts that deceive and defraud,” the rule notes.
The Securities Industry and Financial Markets Association, which brought the lawsuit, declined to comment on the latest changes.
An Ashcroft spokesman did not respond to multiple requests for comment.
The emergency rule goes into effect Nov. 6 and expires May 4.
Learn about the secretary of state’s duties, term and salary.
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