Attorney General Steve Marshall of Alabama has joined a coalition of 17 attorneys general to scrutinize the activities of leading asset managers regarding their Chinese investments. The coalition seeks answers from BlackRock, StateStreet, Invesco, JPMorgan, Goldman Sachs, and Morgan Stanley about potential misrepresentations and omissions concerning investment risks in China.
The letter sent by the attorneys general raises concerns that these firms might be downplaying or concealing risks associated with Chinese investments. This could violate fiduciary duties and state laws on securities and deceptive practices. "Asset managers have a duty to be transparent with their investors, not to obscure the significant risks posed by investments in a foreign adversary," said Attorney General Steve Marshall. He highlighted concerns over China's market interference, human rights abuses, and geopolitical threats impacting American investors' financial security.
Specific issues cited include BlackRock's failure to disclose China's intentions toward Taiwan and reliance on potentially illegal investments according to the Chinese Communist Party (CCP). Furthermore, BlackRock's characterization of Uyghur forced labor as "religious and nationalist disputes" was criticized.
BlackRock is also accused of misleading shareholders about the quality of Chinese audits and providing similar ESG ratings for its all-China fund as it does for U.S. small-cap stocks despite significant environmental violations by China. The asset managers' actions are seen as potentially conflicting with their duty of loyalty due to CCP interference.
The coalition suggests that misstatements may arise from conflicts of interest or an inability to accurately assess facts due to CCP manipulation. To facilitate ongoing investigations, Attorney General Marshall demands responses from the asset managers by March 10.
Attorneys general from Idaho, Indiana, Iowa, Kansas, Mississippi, Missouri, North Dakota, Oklahoma, Ohio, South Carolina, South Dakota, Texas, Virginia, West Virginia, Wyoming joined Montana Attorney General Austin Knudsen in this effort.