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As President Trump imposes new tariffs on China, BlackRock, the world’s largest asset manager that is already under scrutiny over its ESG investment policies, now is the target of new probe delving into Chinese investments.
BlackRock, along with other leading asset managers, is being targeted by a group of 17 Republican state attorneys general allege because these top firms “appear to make misrepresentations and omit essential disclosures for funds that include Chinese investments,” according to a letter sent to the firms.
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Montana Attorney General Austin Knudsen led a coalition of 17 attorneys general in demanding answers from the world’s top asset managers to determine if they are misrepresenting and omitting essential disclosures regarding Chinese investments, in a 20-page letter sent last week to BlackRock, StateStreet, Invesco, JPMorgan, Goldman Sachs, and Morgan Stanley.
“State attorneys general enforce laws related to fiduciary duties and misrepresentations, and represent states in disputes with outside contractors. Many of the largest asset managers in the world appear to make misrepresentations and omit essential disclosures for funds that include Chinese investments,” begins the letter.
AG Knudsen raises concerns that the asset managers appear to be misrepresenting and concealing the risks of Chinese investments to their investors, especially as China is a foreign adversary of the United States and even so BlackRock and other asset managers imply investing in China has similar risks to investing in other countries.
“China is a foreign adversary of the United States, threatens to invade Taiwan at any time, engages in forced labor and genocide, and that barely scratches the surface of their market risk and aggression against our country. It is very concerning that asset managers are withholding these facts, and the significant financial risk Chinese investments pose to their investors,” AG Knudsen wrote. “I am determined to get to the bottom of their actions to ensure they are following the law and meeting their obligations to their clients.”
In addition to concealing the risks associated with investing in a foreign adversary of the U.S., BlackRock also fails to disclose China’s intention to invade Taiwan and when its funds rely on investments that could be ruled illegal at any time by the Chinese Communist Party (CCP). Additionally, BlackRock refers to China’s Uyghur forced labor and genocide as “religious and nationalist disputes” rather than call it was it is.
Related: BlackRock quits Net Zero climate group, after ongoing pushback against ESG investing
To aid in ongoing investigations, the AGs are demanding that the asset managers provide detailed answers regarding their Chinese investments by March 10.
Attorneys general from Alabama, Idaho, Indiana, Iowa, Kansas, Mississippi, Missouri, North Dakota, Oklahoma, Ohio, South Carolina, South Dakota, Texas, Virginia, West Virginia, and Wyoming also joined AG Knudsen’s letter.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
