Teacher, pub­lic pen­sion funds may drop gun firms

Austin American-Statesman - - NEWS - By Michael Gorm­ley

AL­BANY, N.Y. — From Cal­i­for­nia to New York, teacher and pub­lic­worker re­tire­ment funds are re­con­sid­er­ing their in­vest­ments in gun mak­ers and con­fronting an un­com­fort­able fact: Their pen­sions have sup­ported the man­u­fac­ture of deadly weapons, in some cases the same type of guns used in the Con­necti­cut school shoot­ing.

For years, the gun in­dus­try has been a re­li­able in­vest­ment, at­tract­ing tens of mil­lions of dol­lars from some of the na­tion’s largest re­tire­ment funds.

But af­ter the blood­bath in Con­necti­cut, in­vest­ments are un­der re­view in at least four states, in­clud­ing two of the most pop­u­lous, Cal­i­for­nia and New York.

Although the amount in­volved is rel­a­tively small com­pared with the size of the pen­sion funds, it has raised ques­tions about the so­cial re­spon­si­bil­i­ties of huge re­tire­ment sys­tems that in­vest on be­half of mil­lions of Amer­i­can work­ers.

“It’s a bad in­vest­ment to put money be­hind com­pa­nies that put mil­i­tary-grade weapons on our streets and refuse to take re­spon­si­bil­ity for the out­come,” said New York City Pub­lic Ad­vo­cate Bill de Bla­sio.

New York state Comptroller Thomas DiNapoli, who has some­times wielded the state’s $150.1 bil­lion pen­sion fund to urge com­pa­nies to change their prac­tices, is now re­view­ing nearly $12 mil­lion in­vested in firearms com­pa­nies, which have seen their stocks plum­met since the at­tack.

The Cal­i­for­nia State Teach­ers’ Re­tire­ment Sys­tem an­nounced Tues­day that it would also re­view in­vest­ments in the na­tional and in­ter­na­tional firearms busi­ness.

That sys­tem had in­vested $600 mil­lion in the pri­vate eq­uity firm Cer­berus Cap­i­tal Man­age­ment, which on the same day put up for sale the gun maker known as Free­dom Group In­ter­na­tional, man­u­fac­turer of the Bush­mas­ter AR-15 mil­i­tary-style ri­fle, the weapon Adam Lanza used to kill 26 peo­ple at Sandy Hook Ele­men­tary School in New­town, Conn.

The Cal­i­for­nia re­tire­ment fund also owns shares of Sturm, Ruger & Co. and Smith & Wes­son Hold­ing Corp., two pub­licly traded gun man­u­fac­tur­ers.

The New York State Teach­ers’ Re­tire­ment Sys­tem holds nearly $3.4 mil­lion in Sturm Ruger & Co. and nearly $3 mil­lion in Olin Corp, which man­u­fac­tur­ers Winch­ester arms. That’s out of to­tal as­sets worth $38.1 bil­lion.

In Penn­syl­va­nia, the teach­ers’ pen­sion fund re­acted quickly, con­tact­ing Cer­berus about the Free­dom Group even be­fore the eq­uity firm an­nounced it was sell­ing the gun maker.

The Penn­syl­va­nia fund has less than $2 mil­lion in­vested in Cer­berus, and those hold­ings will soon be liq­ui­dated, an of­fi­cial said. Although the fund has no so­cial in­vest­ment pol­icy, its board mem­bers be­came con­cerned af­ter the Con­necti­cut at­tack.

Some other pub­lic fund in­vestors said the tragedy is forc­ing them to re­think where they put their money.

Matthew Sweeney, spokesman for New York City Comptroller John Liu, said the city is re­view­ing its hold­ings and “ag­gres­sively ex­plor­ing all op­tions,” in­clud­ing dump­ing the in­vest­ments.

He ad­vises the pen­sion fund that cov­ers city em­ploy­ees other than teach­ers, in­clud­ing po­lice, fire­fight­ers and other city work­ers.

Con­necti­cut Trea­surer Denise Nap­pier said the state’s $23 bil­lion pen­sion fund in­cludes one link to a weapons man­u­fac­turer: in­vest­ments to­tal­ing $900,000 in Alliant Tech Sys­tems, an aero­space de­fense com­pany that sup­plies am­mu­ni­tion to law en­force­ment and com­mer­cial cus­tomers.

“My in­ter­est is en­sur­ing that any com­pany in which Con­necti­cut pen­sion funds are in­vested con­ducts its busi­ness con­sis­tent with our stan­dards for re­spon­si­ble cor­po­rate cit­i­zen­ship — which in­cludes con­sid­er­a­tions of pub­lic safety and the well­be­ing of our chil­dren,” she said in a state­ment.

Some states — in­clud­ing Ge­or­gia, Mis­sis­sippi, Louisiana, North Dakota and New Jersey — have no gun mak­ers in their pen­sion port­fo­lios or they have lit­tle in­vested. Oth­ers, like Ten­nessee, leave in­vest­ment de­ci­sions to in­dex funds.

And some states are con­tent to leave their in­vest­ments alone, such as Arkansas and Texas.

In Texas, the teach­ers’ fund says it has a “small per­cent” of its $112 bil­lion in firearms man­u­fac­tur­ers. Fund spokesman Howard Gold­man said it would be dif­fi­cult if not im­pos­si­ble to ful­fill the fund’s obli­ga­tions “while man­ag­ing port­fo­lios that re­flect the so­cial con­cerns of all of our share­hold­ers.”

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