Attorney General Steve Marshall and Group of AGs Request Information from Asset Managers about…

A group of 17 attorneys general, including Attorney General Steve Marshall from Alabama, is raising concerns about major asset management firms and their transparency regarding investments in China. In a letter sent to BlackRock, State Street, Invesco, JPMorgan, Goldman Sachs, and Morgan Stanley, the coalition questions whether these firms are adequately disclosing the risks associated with investing in China.

The attorneys general argue that some asset managers may not be providing accurate information to investors about the unique risks of investing in China, especially given the country’s status as a foreign adversary according to the U.S. government. They suggest that failing to fully disclose these risks could violate fiduciary responsibilities, particularly the duty of care, which requires asset managers to thoroughly evaluate risks and provide accurate information to investors. There are also potential conflicts with state securities laws and regulations governing unfair and deceptive business practices.

Attorney General Marshall emphasized the importance of transparency in investments, especially when it comes to risks posed by investments in a foreign adversary like China. He highlighted the Chinese Communist Party’s market interference, human rights abuses, and geopolitical threats as significant factors that could impact the financial security of American investors.

The coalition specifically points out that some asset managers have not fully disclosed risks related to China’s potential military actions, the legality of investments under Chinese government policies, and human rights abuses, such as China’s treatment of the Uyghur population. They also raise concerns about how these firms are addressing environmental, social, and governance (ESG) considerations in their investments in China.

The attorneys general argue that asset managers may be downplaying China’s market manipulation and regulatory unpredictability. They highlight examples like BlackRock increasing its promotion of Chinese investments after expanding its operations in China, even though the U.S. government considers China an adversary. This raises questions about whether these decisions align with the firms’ duty of loyalty to their clients.

Led by Montana Attorney General Austin Knudsen, the coalition is requesting detailed responses from the asset managers by March 10 to evaluate their compliance with fiduciary and legal obligations. The letter is part of a broader effort to hold asset managers accountable for providing accurate and transparent information to investors. The attorneys general who have joined the letter represent a diverse group of states, including Idaho, Indiana, Iowa, Kansas, Mississippi, Missouri, North Dakota, Oklahoma, Ohio, South Carolina, South Dakota, Texas, Virginia, West Virginia, and Wyoming.