{"id":1122017,"date":"2023-01-28T08:11:31","date_gmt":"2023-01-28T13:11:31","guid":{"rendered":"https:\/\/bugaluu.com\/news\/25-states-sue-biden-admin-over-rule-allowing-401k-managers-to-put-savings-into-esg-funds\/1122017\/"},"modified":"2023-01-28T08:11:31","modified_gmt":"2023-01-28T13:11:31","slug":"25-states-sue-biden-admin-over-rule-allowing-401k-managers-to-put-savings-into-esg-funds","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/25-states-sue-biden-admin-over-rule-allowing-401k-managers-to-put-savings-into-esg-funds\/1122017\/","title":{"rendered":"25 States Sue Biden Admin Over Rule Allowing 401(k) Managers To Put Savings Into ESG Funds"},"content":{"rendered":"
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25 States Sue Biden Admin Over Rule Allowing 401(k) Managers To Put Savings Into ESG Funds<\/span><\/p>\n

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Authored by Caden Pearson via The Epoch Times,<\/em><\/a><\/p>\n

A coalition of 25 states is suing the Biden administration over a Department of Labor (DOL) rule that affects millions of retirement accounts, the attorneys general of multiple states involved in the lawsuit announced on Wednesday.<\/p>\n<\/p>\n

The new rule set to take effect on Jan. 30 allows 401(k) managers to invest clients\u2019 money in environmental, social, and governance (ESG<\/a>) funds, a move that 25 states argue violates the Employee Retirement Income Security Act of 1974 (ERISA).<\/p>\n

According to the lawsuit, the rule puts at risk the retirement savings accounts of 152 million workers, or two-thirds of the U.S. population, totaling $12 trillion in assets, in the name of promoting the Biden administration\u2019s climate agenda.<\/strong><\/p>\n

It does this, the states argue, by making changes to the rule that authorizes fund managers (fiduciaries) to consider and promote \u201cnonpecuniary benefits\u201d (benefits not related to money or financial gain) when making\u00a0investment<\/a>\u00a0decisions.<\/p>\n

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\u201cContrary to Congress\u2019s clear intent, these changes make it easier for fiduciaries to act with mixed motives. They also make it harder for beneficiaries to police such conduct,\u201d the lawsuit states (pdf<\/a>).<\/em><\/p>\n<\/blockquote>\n

The 25 states argue in the lawsuit that the Supreme Court concluded that ERISA requires fund managers to put the financial benefits of investments first and not any nonpecuniary benefits. The lawsuit also contends that the high court directly tied the term \u201cbenefits\u201d to \u201cincome\u201d and doesn\u2019t cover nonpecuniary benefits.<\/p>\n

<\/a><\/p>\n

Environmental, social, and governance (ESG). (Deemerwha studio\/Shutterstock)<\/em><\/p>\n

ESG Investment Strategies \u2018Impose a Leftist Social and Economic Agenda\u2019<\/h2>\n

Indiana Attorney General Todd Rokita said\u00a0ESG investment strategies are not designed to maximize financial returns for clients.<\/p>\n

\u201cRather, they have been concocted entirely to impose a leftist social and economic agenda that cannot otherwise be implemented through the ballot box,\u201d he said in a statement on Wednesday.<\/p>\n

ESG funds generally invest in companies that oppose\u00a0fossil fuels, support unionization, and stress gender and racial diversity over merit, even if it results in a lower return for the client. ERISA is in place to safeguard American workers\u2019 retirement savings and ensure that fund managers make investments with the highest potential return for their clients.<\/p>\n

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Indiana Attorney General Todd Rokita speaks in Schererville, Ind., on Nov. 8, 2022. (Darron Cummings\/AP Photo)<\/em><\/p>\n

Rokita has been a vocal critic of ESG investing and has taken several actions to combat it, including issuing an official advisory opinion clarifying that Indiana and its investment managers must prioritize the financial interests of state employees and retirees, refraining from using investment strategies guided or influenced by ESG considerations.<\/p>\n

The Indiana attorney general said he\u2019s also investigating three of the largest investment managers, saying that \u201cwoke big businesses are collaborating with their leftist allies to subvert the will of the people.\u201d<\/p>\n

\u201cThat\u2019s contrary to the letter and spirit of the law,\u201d he said.<\/p>\n

The 25 states participating in the lawsuit are Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, South Carolina, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming.<\/p>\n

States Argue the Rule Harms<\/h2>\n

The states argue that the new rule\u00a0will lead to a decrease in specific tax revenue from retirement distributions, thereby causing a loss of tax revenue for the states.<\/p>\n

Further, the states claim the rule will harm the economic well-being of their residents and will result in reduced investment in the fossil fuel industry, which will decrease revenue, employment, and overall economic activity because several of the states, such as\u00a0Louisiana, Texas, Utah, and Wyoming, have significant oil and gas deposits.<\/p>\n

\u201cSome impacts from reduced investment in the fossil fuel industry will be difficult or impossible to reverse, such that the harm is irreparable,\u201d the lawsuit states. \u201cEven if those impacts could be reduced to monetary harm, damages resulting from the 2022 Rule are presumably not recoverable as a result of the federal government\u2019s sovereign immunity, such that those damages would be an irreparable harm.\u201d<\/p>\n

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Flared natural gas is burned off at Apache Corporations operations at the Deadwood natural gas plant in the Permian Basin, Garden City, Texas on Feb. 5, 2015. (Spencer Platt\/Getty Images)<\/em><\/p>\n

Texas Attorney General Ken Paxton called the new rule\u00a0\u201can affront to every American concerned about their retirement account.\u201d<\/p>\n

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\u201cThe fact that the Biden Administration is now opting to risk the financial security of working-class Americans to advance a woke political agenda is insulting and illegal,\u201d <\/strong>he said in a\u00a0statement<\/a>\u00a0on Wednesday. <\/em><\/p>\n

\u201cFor generations, federal law has required that fiduciaries place their clients\u2019 financial interests at the forefront, and I intend to fight the Biden Administration in court to ensure that they cannot put hard-working Americans\u2019 retirement savings at risk.\u201d<\/em><\/p>\n<\/blockquote>\n

Rule Change<\/h2>\n

President Joe Biden issued executive orders in January and May 2021 directing government agencies to review regulations put in place by the Trump administration, including those on ESG investments.<\/p>\n

The DOL began reviewing the 2020 regulations on ESG investments in March 2021 and announced it would not enforce them during the review. The DOL proposed a new rule change in October 2021, which the lawsuit argues is different from the 2020 regulation in several ways.<\/p>\n

The new rule eliminates the objective pecuniary\/nonpecuniary standard in the 2020 rule and instead formally incorporates subjective ESG concepts into the ERISA regulations, according to the lawsuit. In addition, the new rule doesn\u2019t provide any definition\u00a0or advice on what constitutes an ESG factor.<\/p>\n

The new rule also undermines\u00a0a fund manager\u2019s prudence obligations, the lawsuit claims. Instead of focusing on an investment\u2019s risk and return, a fund manager could consider the economic effects of climate change and other ESG factors in their analysis of the particular investment or investment course of action.<\/p>\n

Citing the preamble to the new rule, the lawsuit states that the new rule tells fund managers to consider multiple factors when analyzing the risk and return of investments, such as \u201cthe potential risks and opportunities related to climate change,\u201d the makeup of a company\u2019s leadership, and the company\u2019s efforts toward diversity and inclusion within their workforce.<\/p>\n

The Epoch Times contacted the DOL for comment.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSat, 01\/28\/2023 – 12:30<\/span><\/p>\n

From:Zerohedge<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

25 States Sue Biden Admin Over Rule Allowing 401(k) Managers To Put Savings Into ESG Funds Authored by Caden Pearson via The Epoch Times, A…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1122017","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1122017","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1122017"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1122017\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1122017"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1122017"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1122017"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}