As legal bills pile up, Missouri secretary of state decides to appeal investing lawsuit
JEFFERSON CITY — The already-ballooning cost of outgoing Secretary of State Jay Ashcroft’s legal fight over “woke investing” rules could be getting even bigger.
With potential bills from a successful industry challenge of Ashcroft’s controversial investing regulations already crossing the $2 million mark, the unsuccessful candidate for governor Friday filed an appeal to the U.S. Court of Appeals for the 8th Circuit.
A decision in the matter may not come until after Ashcroft leaves office in January.
At issue is a 2023 lawsuit filed by the Securities Industry and Financial Markets Association over rules requiring securities firms to obtain written permission from investors before incorporating a “social objective” or other “nonfinancial objective” into their investment recommendations.
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The regulation was part of a Republican-led push to crack down on socially driven investment policies designed to account for the effects of businesses on the environment and other so-called woke issues.
During his campaign, Ashcroft railed about the alleged dangers of investing based on the environmental, social and governance practices of businesses.
“ESG investing opposes fossil fuels, pushes unionization of private companies, pushes radical racial and gender equity over merit, and flexes their influence over who is chosen to sit on corporate boards,” his campaign website said.
Ashcroft finished third in the Aug. 6 Republican gubernatorial primary after leading in the polls for much of the race.
Following a year of trial preparation, U.S. District Judge Stephen Bough in August agreed with the securities industry that the proposed rules were “unconstitutionally vague” and threatened to do “irreparable harm” to financial advisers operating within Missouri.
In his decision to block the rule, Bough warned against using political talking points in setting rules and regulations affecting companies and taxpayers.
The judge wrote that rather than imposing an unconstitutional regulation on an already tightly regulated industry, Ashcroft could have instead embarked on a “public information campaign” to advance his message.
Following Bough’s decision, attorneys for the securities industry group asked the state to pay its legal bills, arguing many of the legal maneuvers used by the politically connected law firm used by Ashcroft were time-consuming and potentially unnecessary.
The bill was set at $1.3 million. The final figure could vary pending the outcome of the appeal.
But attorney Edward Greim, of the Kansas City-based Graves Garrett Greim law firm hired by Ashcroft, said the state would contest the request.
“Defendants do and likely will oppose the amount of fees and expenses SIFMA claims in its motion,” Greim wrote in a Sept. 11 filing.
In addition to potentially paying SIFMA’s legal bills, public payroll records show taxpayers have already paid more than $876,000 to Greim’s law firm, putting the initial price tag for the lawsuit at $2.1 million.
A spokesman for Ashcroft did not respond to a request for comment.
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