Can state regulators be deployed by politicians of a particular party to discourage financial institutions and investment managers from engaging with organizations deemed “offensive?”
It’s a plan currently playing out in New York—which the uber-conservative National Review has flagged—between Gov. Andrew Cuomo and the National Rifle Association.
However one feels about those involved, it potentially has broad First Amendment implications and involves (to a lesser extent) the proper role of regulators in policing the industry.
In Cuomo’s case, National Review’s David French claims the scion of the Empire State’s famous political family “is engaging in a deliberate campaign to use state power to drive the NRA out of business. It’s using a combination of consent decrees and warning letters directed at financial institutions to coerce them into cutting of [sic] business relationships with the NRA.”
French also says state action of this type is unconstitutional, especially when combined with statements like the following made by Cuomo last week:
“If I could have put the NRA out of business, I would have done it 20 years ago… I’m tired of hearing the politicians say, we’ll remember them in our thoughts and prayers. If the NRA goes away, I’ll remember the NRA in my thoughts and prayers.”
Clever, French notes, but “While the government does have broad power to engage in its own advocacy, that power has its limits. As the Second Circuit has recognized, there is a difference between ‘permissible expressions of personal opinion and implied threats to employ coercive State power to stifle protected speech.’”
And here’s where it gets particularly interesting (or scary) for the 401k and larger retirement plan industry.
On or about February 25, 2018, French reports Lockton Companies chairman David Lockton placed a “distraught telephone call to the NRA.”
Lockton had been a close business partner of the NRA for nearly 20 years; “its commitment to the parties’ business relationship had not wavered in connection with the Parkland tragedy, nor the prior Sandy Hook tragedy, nor any previous wave of public controversy relating to gun control.”
Nonetheless, French notes, “although he expressed that Lockton privately wished to continue doing business with the NRA, the chairman confided that Lockton would need to “drop” the NRA—entirely—for fear of “losing [our] license” to do business in New York.
“State officials have their own free-speech rights, yes, but those free-speech rights do not include the right to use express or implied threats to wield state power against disfavored viewpoints,” French concludes. “Heckle all you want, Governor Cuomo. Display your malice. But the instant that malice translates into state action aimed at speech is the instant the Constitution holds you to account.”