But Public Money in Undisclosed ‘Alternative’ Funds May Mask Stakes in Firearms Companies
Massachusetts is the latest state to join an effort to divest public and pension funds of investments in gunmakers.
State Treasurer Deborah Goldberg wants the state legislature to pass a law requiring the state to dump pension investments in gun manufacturers. She said this would affect about $2 million in the pension plan’s $101.5 billion in investments.
“It is unacceptable that we as a country continue to live in a seemingly endless cycle of gun violence,” Goldberg said. “Traditional approaches are not working, and we must do what we can to potentially save lives.”
Goldberg previously asked the state legislature to do this but didn’t succeed.
In Nevada, state Treasurer Zach Conine, who oversees more than $49 billion in investments, wants to divest from companies that sell or make assault weapons. The investments, which won’t be sold at a loss, are expected to affect less than 1% of the state’s investments. Pension funds would not be affected by Conine’s plan.
“It’s time Nevada started investing in a better future where our children aren’t slaughtered in classrooms,” Conine said.
There have been 248 mass shootings so far this year, according to the Gun Violence Archive. More than 18,940 people have died so far this year after being shot. Fifty-nine people died in 2017 after being shot at a Las Vegas music festival, the deadliest mass shooting in our country’s modern history.
Connecticut, Rhode Island and New York City have also chosen to divest from assault weapon manufacturers.
Pension fund managers chasing higher returns have put tens of billions of dollars in risky alternative investments such as private equity, real estate funds and hedge funds. These investments charge higher fees than the staid stocks and bonds that pension money was traditionally invested in, and pension fund managers often don’t completely know what these alternatives are invested in.
Edward Siedle, a former attorney with the U.S. Securities and Exchange Commission, said state investment officials often don’t know what investments are held by hedge funds and other alternative investments.
“It’s a black box,” said Siedle. “Nobody knows what’s in there. I can assure you that the … funds that invest in ‘alternative investments’ don’t know what those funds are actually invested in.”
A Pew Charitable Trusts report in May on our country’s 73 largest state public pensions found that investments in alternatives had doubled since 2006 with about a fourth of public pension funds in alternative investments in 2019.
In Nevada, the State Board of Finance would have to approve Conine’s plan for investments held by the state’s $527 million school fund, its $7.2 billion general portfolio and the $2.4 billion local government investment pool.
Two of the four members of the finance board—Conine and state controller Catherine Byrne—are Democrats. Member Brian Sagert is independent, and member Teresa Courrier is a Republican.
Conine also wants the trustees who oversee the state’s $39 billion college savings plans to divest. Conine is the nonvoting chair of the college savings plan board. Andrew Martin, a CPA and certified fraud examiner, is the other Democrat on the board.
Board member Jeff Haag is nonpartisan. Member Tiffany Greenameyer is Republican. Board member Andrew Clinger is listed as nonpartisan in a financial disclosure form, but Nevada’s voter database lists him as a Republican.
Correction: An earlier version of the story said the Nevada State Board of Finance oversees the Nevada Higher Education Prepaid Tuition Trust. It doesn’t. The Trust is overseen by the College Savings Plan Board.