Just days after a gunman killed 20 first graders and 6 teachers and administrators at a suburban Connecticut school, California Treasurer Bill Lockyer proposed that the state’s two public pension funds divest themselves of gun makers.
The state’s teacher’s pension fund had invested with private equity firm Cerberus Capital Management, which owned the company that made the Bushmaster semi-automatic rifle used in the Connecticut shooting. Cerberus subsequently announced it was selling Freedom Group, which it had created by merging Bushmaster with other gun makers.
Lockyer denied directly impacting Cerberus's decision but tells The Daily Ticker he wants the investment managers of California's huge state public pension funds to also consider divesting themselves of gun maker stocks.
“I want BlackRock (BLK), I want Credit Suisse (CS), I want everyone else to know that we’re going to use our economic leverage if it’s up to me—and I hope I’ll be persuading others. I hope other pension funds, I hope other private investors will do the same thing," he says. "These are illegal weapons in a lot of our states. They ought to be illegal in the United States entirely….they ought to feel the economic consequences of their bad behavior.”
Semi-automatic assault weapons and magazines that can hold more than 10 rounds of ammunition are illegal in California.
Lockyer is just one member of the board of trustees of the California’s teachers (CalSTRS) and public employee (CalPERS) pension funds, which combined have about $400 billion in assets. He hopes to prevail in persuading other members of the two boards to go along with him on divesting the funds of gun makers. Lockyer expects the issue will be discussed at meeting of trustees in January. Meanwhile, he says staff of the two mega pension funds—the nation’s largest--will be gathering the facts on these investments.
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