After a careful review of a package of rules proposed by Secretary of State Chuck Gray regarding environmental, social and governance (“ESG”) investment disclosure and consent, Governor Mark Gordon found that parts of the rules exceeded the Secretary’s statutory authority. As a result, the governor vetoed parts of the rules.
The Governor has long opposed any artificial embedding of ESG factors into investment strategies.
“While I agree that ESG investment guidelines are flawed and misleading, the answer to too much government interference in our lives is not more government,” Governor Gordon said. “No government should have the right to direct people’s personal investment strategies.”
In a letter sent to Secretary Gray, Governor Gordon notes that by law he can approve rules only within the limits set by law. In the case of the proposed rules regarding ESG investing, the statute prevents the government from telling people how they should invest their dollars. The consumer protections required by Wyoming and federal law speak only to transparency and disclosure. Informed consumers should have the freedom to make their own investment choices.
“To be clear, I agree with your efforts to better illuminate investment practice and strategy through disclosure. “Properly informed investors are always better able to make good decisions for themselves,” Governor Gordon wrote.
“Our appetite to oppose radical and misguided ESG initiatives in Wyoming does not justify enforcing rules beyond statutory authority or interfering with the personal investment choices of Wyoming citizens. Personal responsibility and freedom are sacred principles that are too often usurped by government mandate,” he added.
In the letter, the governor also notes that federal securities laws specifically prohibit state conflicts “in the regulation of (1) federally covered securities, (2) broker-dealers, (3) federally covered investment advisers, (4) representatives of investment advisers and (5) securities agents.”
The Governor’s letter to the Secretary of State can be viewed here. A copy of the governor’s line item veto can be found here.
Minister Gray expresses disappointment with Governor’s veto of rules to protect ESG investment investors through increased disclosure; Minister Gray reiterates the need to protect investors from radical ESG investments
On February 27, 2024, Governor Mark Gordon vetoed amendments to Chapters 2, 4, 5 and 10 of the Wyoming Secretary of State’s securities rules that required disclosure and consent for environmental, social and governance (“ESG”) investments. strategies by requiring investment advisers, broker-dealers and securities agents to disclose to their clients or customers whether they include a social purpose, i.e. whether they take into account social criteria, in the investment or engagement of client or client funds and obtain their consent. Following the governor’s position veto, the rules narrow the definition of social purpose and will require written disclosure for some ESG-related investments, but will not require client or client consent.
“I am disappointed and disagree with Governor Gordon’s decision to veto key parts of our proposed Securities Rules,” Secretary of State Chuck Gray said in a statement. “From the outset of this rulemaking, we have addressed the concerns raised by Governor Gordon. We went through a period of extensive public comment and fully considered all feedback received. As I wrote previously in my letter dated July 19, 2024 and again in my letter dated January 16, 2024, the Wyoming Uniform Securities Act clearly allows Wyoming to protect clients and customers from the harmful effects of ESG investments. I’m disappointed to see the governor’s reasoning adopt the recycled talking points of the radical left and Wall Street elites instead of sound legal arguments. We must take concrete, proactive action to protect our country and consumers from the dangers presented by ESG investments maliciously targeting our core industries.
“Although the Governor’s line item veto weakened the degree of protection we have sought to provide clients and customers to protect them from the dangers of ESG investment strategies, I believe the final rules offer a necessary starting point to protect residents of Wyoming by the social ideologues pushing their radical clown show agenda on our state.
