Missouri Legislature is at it again

Missouri lawmakers are once again considering legislation that could negatively impact taxpayers and the state’s retirees alike by injecting politics into the investment and business decisions made by financial institutions across the state.   

Senate Bill 272, most recently voted “Do Pass” on April 2 by the Economic and Workforce Development Committee, would require companies doing business with state public entities to provide written certification stating they are not engaged in economic boycotts. In particular, it would ensure they are not boycotting companies that produce oil and gas or manufacture ammunition and firearms, or do not support access to abortion or transgender surgery and medical treatments.

The bill allows the Attorney General to determine if any company violated the certification and the terms of the contract. Penalties for alleged violations of these overly broad and subjective requirements would include termination of the contract and penalties totaling three times the amount of the contract.

The bill does not limit its scope to state public entities either; it firmly places lawmakers’ political concerns into the relationships between private businesses by making concerns over DEI considerations an unlawful business practice.

The Attorney General would be empowered to investigate or sue a private business that refuses to enter into or maintain a contract with another private business based, in whole or in part, on requirements or concerns around race, ethnicity, nationality, socioeconomic status, sex, sexual orientation, gender, or gender identity.

An identical bill failed to pass in 2024.

This action by the Missouri Legislature comes on the heels of a 2024 ruling by a federal judge that found the state’s somewhat related anti-ESG rules violated the First Amendment rights of investment advisers and were preempted by numerous federal laws.

In that case, the Securities Industry and Financial Markets Association (SIFMA) argued against rules that required investment advisers to obtain customers’ consent to consider ESG objectives in their investments.

SIFMA President Kenneth Bentsen Jr. stated at the time: “Under today’s federal securities laws, financial professionals are already required to provide investment advice and recommendations that are in their customers’ best interest.” He continued, “That means they cannot put their interests ahead of their customers’ interests when recommending securities.”

Even while courts continue to reject these efforts, elected officials remain committed to expanding their influence over public and private entities. The resulting patchwork of laws and regulations that vary by state only cause confusion for businesses and investors – and potential harm to workers and retirees.