‘Woke Politics’ Rule Struck Down by Judge

A Missouri judge struck down an investment rule in the state seeking to go after “woke politics.”
On Wednesday, U.S. District Judge Stephen R. Bough ruled against an investment regulation in Missouri led by Republican Secretary of State Jay Ashcroft, who sought to reveal financial companies and institutions that “put woke politics ahead of investment returns.”
The judge ruled that the regulations put in place by Ashcroft violated the financial institution’s free speech.
Kara Corches, interim president and CEO of the Missouri Chamber of Commerce and Industry said that the regulations “would have placed an unnecessary burden on investment firms—small and large—doing business here in Missouri,” The Associated Press (AP) reported.
Ashcroft, whose office oversees state securities laws, implemented rules in 2023 requiring investment professionals to obtain written consent from clients before factoring in “a social objective or other nonfinancial objective” when making decisions about buying or selling securities.
In 2023, after Ashcroft announced his candidacy for Missouri governor, he repeatedly spoke about his plans to require businesses and financial institutions “to disclose to their clients when they make ESG [environmental, social and governance] investments that put woke politics ahead of investment returns.”
However, in the Aug. 6 Republican gubernatorial primary, Ashcroft finished in third place. Ashcroft said his goal was to raise awareness about investment firms incorporating environmental, social, and governance (ESG) principles into their practices.
In a ruling on Wednesday, U.S. District Judge Stephen R. Bough struck down the Missouri regulation, stating it was preempted by federal laws governing investment brokers and was unconstitutionally vague. He also ruled that the measure infringed on the First Amendment rights of investment advisers.
In his ruling, Bough added that the rule from Ashcroft could have been more tailored if the goal was to stop fraud among financial institutions.
In a statement to The Associated Press, Ashcroft said his office is actively looking at options to appeal the ruling.
“The Court’s decision was not just legally deficient but also morally wrong and puts Missouri investors at risk,” Ashcroft said in a statement.
The Securities Industry and Financial Markets Association (SIFMA) also responded to the ruling. SIFMA previously challenged the regulations proposed by Ashcroft, which eventually led to it being overturned in court.
In a statement SIFMA President and CEO Kenneth E. Bentsen Jr. said in a statement said that under federal law, “financial professionals are already required to provide investment advice and recommendations that are in their customers’ best interest.”
“The Missouri rules were thus unnecessary and created confusion,” the statement added.