(Bloomberg) -- New York City’s pension funds have decided to sell its investments in private prison companies, citing a record of alleged human rights abuses and citing the risk of the industry attracting “long-term reputational and financial harm.”
Trustees for the city’s five pensions voted in mid-May to become the first retirement funds in the U.S. to divest such assets, totaling about $48 million worth of stock and bonds from GEO Group Inc., CoreCivic Inc. and G4S Plc, Comptroller Scott Stringer said in a statement Thursday.
The amount represents a tiny portion of the more than $175 billion held on behalf of the city’s police officers, fire fighters, civil service workers, teachers and school administrators.
The decision came after months of deliberation and more than a year after the companies’ stocks tumbled, in response to an order from then Deputy U.S. Attorney General Sally Yates that the Federal Bureau of Prisons stop contracting with such companies.
While the shares have since more than recovered those losses amid speculation that President Donald Trump will be a boon to the industry, that highlighted the risks of investing in an industry that is frequently criticized for profiting from keeping people behind bars.
“Morally, the industry wants to turn back the clock on years of progress on criminal justice, and we can’t sit idly by and watch that happen,” said Stringer, who serves as the funds’ custodian and investment adviser. “Divesting is simply the right thing to do, financially and morally.”
The comptroller cited news reports and lawsuits of alleging physical and sexual abuse of inmates, wrongful deaths, and increased violence due to improper staffing in privately managed prisons.
“These failings can lead to reputational, legal, and regulatory risks, which could seriously harm investors,” Stringer’s office said in a news release explaining the decision.
Stock prices in the three companies plunged in August following the Justice Department decision, only to more than recover those losses after Trump’s election. GE0, which plunged 40 percent on Aug. 18 to $13, has since climbed to $31.48. CoreCivic has risen 22 percent this year to $29.82.
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