On January 26, Indiana Attorney General Todd Rokita issued a press release, endorsing Indiana House Bill 1008, which codifies Indiana Public Retirement System (INPRS) policy to prioritize the financial returns of public retirement funds ahead of environmental, social, and governance (ESG) corporate policies. While still in the House, legislators expect the bill to pass by its effective July 1 date.

The bill requires those supervising INPRS investments (i.e., investment managers or proxy advisors) to discharge their duties “solely in the financial interests of the participants and beneficiaries of the public pension system,” while also considering “only financial factors” to discharge the fiduciary’s duties to the state. If passed, only those who “have a practice” of following this policy, or “commit in writing” to following this policy, can manage Indiana’s public retirement funds. Further, a fiduciary may be in legal violation if he/she “[takes] an action or considered a factor with a purpose to further social, political, or ideological interests.” As currently drafted, the bill lacks any punitive measures.

In a press release, General Rokita also noted the lack of an enforcement mechanism in the bill and stated: “This bill still needs real legal teeth to hold any bite against the massive asset managers who handle a majority of the world’s wealth. It requires a real law enforcement mechanism which takes advantage of the court system and reinforces the full applicability of our consumer and anti-trust laws to the bill’s language. We are actively battling to protect investors against ESG practices and policies.”

Why It Matters?

General Rokita’s endorsement aligns with other efforts, primarily led by Republican officials, to counteract claims of potential harms to investors and consumers posed by the growing ESG movement. As one of the first examples of a legislative attempt to codify an anti-ESG policy for state retirement funds, we expect other states will follow. As such, investment firms that manage public retirement funds should pay attention to the anti-ESG movement and corresponding legislation to avoid potentially burdensome regulatory scrutiny and harm to their client base.

Troutman Pepper State Attorneys General Team

Ashley Taylor – Co-leader and Firm Vice Chair
Ashley is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. He focuses primarily on federal and state government regulatory and enforcement matters involving state attorneys general, the Consumer Financial Protection Bureau (CFPB), and the Federal Trade Commission (FTC). Drawing upon his experience as a deputy attorney general, Ashley has developed an extensive consumer practice with regard to the consumer financial services industry.
Clay Friedman – Co-leader
Clay is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. Informed by nearly a decade in a state attorneys general office, and more than 25 years in private practice, Clay spends much of his time representing clients in singular or multistate regulatory actions. Clay has repeatedly led teams before all 50 state attorneys general and also handles matters with the Federal Trade Commission, the Consumer Financial Protection Bureau, and other local, state and federal agencies.
Stephen Piepgrass
Stephen represents clients interacting with, and being investigated by, state attorneys general and other enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, particularly in heavily regulated industries.
Michael Yaghi
Michael handles high-profile state attorneys general, FTC, and CFPB investigations by advising clients through these complex government inquiries. He assists clients through the entire life cycle of investigations, from regulatory enforcement through formal litigation.
Ketan Bhirud
As a former government official at the state and federal level, Ketan leverages extensive experience in the public and private sectors to skillfully represent client interests.
Avi Schick
A former deputy attorney general of New York, Avi applies his experience in bet-the-company matters, representing clients in criminal and civil investigations and enforcement actions before state and federal regulators, prosecutors and enforcement agencies.
Chris Carlson
Chris represents clients in regulatory, civil and criminal investigations and litigation. In his practice, Chris regularly employs his prior regulatory experience to benefit clients who are interacting with and being investigated by state attorneys general.
Natalia Jacobo
Natalia is an associate in the firm’s business litigation practice. She recently received her J.D from the University of California, Davis School of Law.
Namrata Kang
Namrata is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. Her work includes advising clients in regulatory investigations and compliance matters, in addition to representing clients in civil litigation matters.
Susan Nikdel
Susan is an associate in the firm’s Consumer Financial Services Practice Group, and focuses her practice on consumer financial services matters. She has defended several of the nation’s largest and most influential financial institutions in individual and class action litigation involving the Telephone Consumer Protection Act (TCPA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and other consumer privacy statutes. Susan also represents banks, fintechs, and financial services companies in connection with regulatory examinations and investigations brought by the CFPB, state attorneys general, and the California Department of Financial Protection and Innovation.
Whitney Shephard
Whitney is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She represents clients facing state and federal regulatory investigations and enforcement actions, as well as related civil litigation.
Trey Smith
Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement practice. His experience includes serving as a summer associate at the firm in 2021.
Daniel Waltz
An experienced litigator, Daniel advises and represents regional, national and international companies, financial institutions and insurers in all facets of business, complex commercial and insurance coverage litigation. He is committed to working with his clients to find creative solutions to meet their needs.
Stephanie Kozol
Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department.