Large financial asset manager in legal trouble with Tennessee government
Nashville, TN – The state of Tennessee has filed a lawsuit alleging that BlackRock is causing financial harm and other kinds of damage through its political stance.
Tennessee government suing BlackRock over misleading consumers
In a groundbreaking legal development, the state of Tennessee has initiated a lawsuit against BlackRock, the world’s largest financial asset manager, alleging that the company has harmed consumers through its environmental commitments and climate strategy [1]. This lawsuit marks the first legal challenge to BlackRock’s conduct in the context of consumer protection laws and its stance on environmental, social, and governance (ESG) issues.
The lawsuit, filed in state court and revealed by FOX Business, accuses BlackRock of maintaining two inconsistent positions: one emphasizing financial returns and the other emphasizing investment policies aimed at combatting climate change. This duality has sparked criticism and opposition to BlackRock’s ESG strategy, with Tennessee Attorney General Jonathan Skrmetti asserting that BlackRock’s conflicting statements have deprived consumers of making informed investment choices.
Skrmetti stated, “We allege that BlackRock’s inconsistent statements about its investment strategies deprived consumers of the ability to make an informed choice.” He added, “Ultimately, I want to make certain that corporations, no matter their size, treat Tennessee consumers fairly and honestly.”
BlackRock, with assets under management totaling a staggering $9.1 trillion worldwide, has been a focal point of scrutiny from Republican state attorneys general and state financial officers over the past two years. Critics argue that the company’s ESG policies exert undue influence over the business practices of the companies it invests in, potentially compromising its fiduciary duty to prioritize the financial well-being of its clients. Critics also contend that these policies could lead to diminished financial performance due to the profitability of the fossil fuel industry.
The lawsuit underscores BlackRock’s acknowledgment that its promotion of ESG objectives, such as substantial reductions in carbon emissions by companies, can sometimes conflict with the financial performance of its funds. The lawsuit asserts, “It is thus only fair that consumers know if the hard-earned funds they invest will be leveraged to BlackRock’s ESG ends, rather than to maximizing financial returns.”
Furthermore, the lawsuit contends that BlackRock has misled consumers about the extent and consequences of its widespread ESG activities. The lawsuit alleges that BlackRock’s conduct regarding the marketing and sale of its investment products and services constitutes deceptive practices under the Tennessee Consumer Protection Act.
This legal action against BlackRock reflects the growing tension and scrutiny surrounding ESG-focused asset managers in the financial industry. As the world grapples with climate change and increasing concerns about corporate responsibility, the outcome of this lawsuit will likely have far-reaching implications for the asset management industry’s approach to ESG investing and the protection of consumer interests.
In summary, the state of Tennessee has taken the unprecedented step of suing BlackRock, alleging that the company’s inconsistent statements and ESG practices have harmed consumers and violated consumer protection laws. This lawsuit represents a pivotal moment in the ongoing debate over the role of ESG in financial markets and the responsibilities of asset managers to their clients.
What kinds of practices are illegal under the Tennessee Consumer Protection Act?
The Tennessee Consumer Protection Act (TCPA) is a crucial piece of legislation designed to safeguard the rights and interests of consumers within the state. It encompasses a wide range of practices that are considered illegal under its provisions, all aimed at preventing fraudulent, deceptive, and unfair business practices. Here are some of the key types of practices that are prohibited under the TCPA:
- Deceptive Advertising: The TCPA prohibits businesses from engaging in deceptive advertising practices. This includes false or misleading statements about the quality, characteristics, price, or benefits of a product or service. Any misrepresentation that could potentially deceive consumers is strictly prohibited.
- False Representations: Businesses are not allowed to make false representations or statements to consumers, whether about their own products and services or those of their competitors. This includes false claims about warranties, endorsements, affiliations, or certifications.
- Fraudulent Sales Practices: The TCPA forbids fraudulent sales practices such as bait-and-switch tactics, where a business advertises one product or service to lure consumers in and then tries to sell them a different, often more expensive, product or service.
- Unfair Trade Practices: Unfair trade practices, which may include tactics that harm consumers and competitors unfairly, are prohibited. This can encompass various forms of anti-competitive behavior or practices that result in unreasonable consumer harm.
- Price Gouging: During declared emergencies or disasters, businesses are barred from engaging in price gouging by excessively raising prices on essential goods and services, such as food, water, fuel, and shelter.
- Misrepresentation of Consumer Rights: The TCPA protects consumers from businesses misrepresenting their rights, including warranty rights, return policies, and the right to cancel certain contracts or agreements within a specified timeframe.
- Unauthorized Charges and Billing: Businesses cannot impose unauthorized charges or fees on consumers’ accounts, nor can they engage in unauthorized billing practices. This helps prevent consumers from being charged for services or products they did not request or use.
- Identity Theft and Data Breaches: Businesses are obligated to protect consumers’ personal information and notify them promptly in the event of a data breach. Failure to do so or negligence in safeguarding personal data may lead to legal action under the TCPA.
- Unconscionable Contracts: The TCPA prohibits the use of unconscionable contract terms or provisions that are one-sided and overly favorable to businesses at the expense of consumers’ rights and interests.
- Harassment and Unfair Collection Practices: Debt collectors and businesses are restricted from engaging in harassment, false threats, or other unfair and abusive practices when attempting to collect debts from consumers.
Overall, the Tennessee Consumer Protection Act serves as a robust framework to protect consumers from various forms of deceptive, fraudulent, and unfair business practices. It empowers consumers with legal remedies and recourse in cases where their rights have been violated, fostering a fair and transparent marketplace within the state. Businesses operating in Tennessee are expected to adhere to these regulations to maintain ethical and lawful conduct while serving their customers.
Business attorneys are available in Nashville
The Law Office of George R. Fusner is a firm that handles various business matters for local clients in the Nashville area.
USAttorneys.com is a service that works with people who need to find lawyers. Those who need assistance with a referral can call 800-672-3103
Firm contact info:
The Law Office of George R. Fusner
7104 Peach Court, Brentwood TN 37027
615-251-0005
gfusnerlaw.com
Sources:
- https://www.foxbusiness.com/politics/tennessee-sues-blackrock-first-of-its-kind-esg-lawsuit
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