It's not a secret that, under the Biden administration, the Securities and Exchange Commission has prioritized enforcement of disclosures concerning Environmental, Social, and Governance Issues (ESG), going so far as to form an enforcement task force to examine misconduct related to these disclosures.  Recently, the SEC's Fort Worth regional office reportedly launched an investigation into ESG disclosures by underwriters relating to investments in the oil-and-gas and firearm industries.

Many financial institutions have enacted policies limiting their participation in these industries.  In response, recently enacted provisions of the Texas Government Code place restrictions on the ability of Texas governmental entities (e.g., state and local governmental bodies issuing securities) to invest with, or enter into contracts with, companies that "boycott" or "discriminate" against the oil-and-gas and firearm industries.  See Tex. Gov. Code Chapters 809 and 2274.  The new laws require financial institutions doing business with Texas governmental entities to certify they are not boycotting or discriminating against these types of companies.  The SEC is reportedly investigating whether financial institutions doing underwriting work in Texas are being consistent in what they disclose to investors and the State of Texas regarding these hot-button issues.  The Reuters article reporting the investigation is available here.

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