Indiana Secretary of State Issues, Cease, and Desist Order Against BlackRock for Alleged Fraud Connected to ESG Products and Offerings

Red state governments are increasingly taking the fight to BlackRock

On August 22, 2024, Indiana Secretary of State Diego Morales issued a cease and desist letter to BlackRock for its alleged involvement in securities fraud. The world’s largest asset manager was accused of making “false and misleading statements” about their environmental, social or governance (ESG) funds and where these funds are allocated towards.

Morales published the letter through the Indiana Securities Division, a branch of the secretary of state’s office that deals with the regulation of the securities industry. 

According to a report by the Indiana Daily Student, the letter is very similar to one put forward by Mississippi Secretary of State Michael Watson back in March. 

The Indiana Securities Division asserts that BlackRock, “through its assertions relating to ESG products and offerings, has repeatedly made false and misleading statements to Hoosier investors,” Morales stated.

Morales blames the company for informing its clients that their financial prospects and outcomes would be better in the long-run by investing ESG-backed funds. The secretary of state emphasized in his letter that there is “little to no evidence” to reinforce that claim, whereas Morales offers no evidence of his own to back up the allegations.

“Investment companies that engage in fraudulent activities not only betray the trust of their clients but undermine the integrity of our financial markets,” Morales declared on August 22 in a written statement. “My office is committed to rigorously enforcing the law and strengthening our regulatory frameworks to ensure Hoosier investors are protected and that those who exploit the system are held accountable.”

Morales added that BlackRock further asserts that its funds “are not marketed as ESG do not follow an ESG investment strategy.” 

“However, 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,” Morales added.

In a statement, a representative from BlackRock said to the Indiana Capital Chronicle Morales’ letter is tantamount to “a politically motivated attack that completely mischaracterizes BlackRock’s approach to investing.”

“We are only focused on helping hundreds of thousands of Hoosier clients achieve their investment goals.,” the statement added. “We intend to defend ourselves and our clients against this arbitrary use of state power.”

Heritage Action, a sister organization to conservative think tank The Heritage Foundation, congratulated Morales on August 22 for “taking bold action” and “joining efforts across the country to protect consumers and combat harmful (ESG) investing practices at BlackRock.”

“Asset managers have a duty to put investors’ financial interests ahead of the Left’s political agenda,” Heritage Action Director of State Advocacy Catherine Gunsalus declared in a press release. “Heritage Action is thrilled to see Indiana join Mississippi and a growing number of states fighting to protect the savings of hardworking Americans. We commend Secretary Morales for leading the Hoosier charge to strengthen the nationwide movement against irresponsible ESG investing.”

Several Republican states have already gone toe-to-toe with BlackRock’s ESG agenda.In March 2023, 21 Republican Attorneys General published a letter directed to asset managers, which includes BlackRock,  asserting breaches of their fiduciary duties and violations of antitrust law as a consequence of their ESG investing, in addition to the asset managers’ participation in attempts to increase public disclosure concerning the alleged risks and impacts of climate change.

For its part, Indiana passed legislation that prohibited 

controversial ESG investment strategies. Over two dozen other states have passed similar legislation, per Heritage Action.

ESG needs to be purged out of Red America. That’s the moderate position that should be taken in dealing with subversive private actors such as BlackRock. The time of peacefully co-existing with these reprobates is over. It’s time to drop the hammer.