SIFMA v. Missouri ESG lawsuit heads toward August arguments
3 min readThe Securities Industry and Financial Markets Association and State of Missouri have each filed summary judgement bids urging a judge to rule in their favor in a lawsuit over the state’s first-of-its-kind environmental, social and governance investment regulation.
The court has set an Aug. 13 date for oral arguments on the dueling motions.
SIFMA
The regulation, which took effect last July, opened a new front in the national Republican-led anti-ESG battle by attempting to directly regulate asset managers.
Missouri Secretary of State John R. Ashcroft enacted the rules after lawmakers failed to pass a bill with the same goals. SIFMA’s
In January, Judge Stephen Bough of the U.S. District Court for the Western District of Missouri
In its
The “arguments for or against ESG investing are beside the point,” SIFMA said in its motion. “The question here is whether the rules comport with federal law. They do not. They intrude into areas that are the exclusive province of federal regulation. They abridge the freedom of speech by compelling speakers to make controversial, confusing, and misleading statements they do not wish to make. And they leave financial firms and professionals guessing as to what exactly the rules require.”
In its
“While federal securities regulation has expanded and grown over time, it has never been interpreted or applied to eliminate a state’s ability to protect its residents from fraud and deceit,” Missouri said.
Missouri said that NSMIA excludes the rules based on the state’s traditional police powers, and that the state securities regulation at issue is “expressly excluded” from ERISA preemption.
On the First Amendment argument, the state said that SIFMA and its representative member, Edward D. Jones & Co., L.P., “challenge language that is not found in the rules themselves. Even if the challenge involved language in the rules, the consumer protection disclosures at issue pass muster under the First Amendment.”