California Treasurer John Chiang is concerned that the state’s teachers’ pension system still has investments managed by a firm that hasn’t kept its promise to sell off its firearm-manufacturing holdings.
This all started with the December, 2012 schoolhouse massacre in Newtown, Conn., in which a Bushmaster AR-15-type semi-automatic rifle – which fit California’s definition of an assault weapon – was used to kill 20 children and six adults. Bushmaster – along with Remington, Marlin and several other firearm brands – belongs to the Freedom Group, which in turn is owned by Cerberus Capital Management.
Soon after the Newtown shooting, the California State Teachers’ Retirement System (CalSTRS) issued a statement expressing concern that Cerberus – which manages some private equity funds in which CalSTRS is invested – owned Freedom Group. But Cerberus had just announced that it intended to sell Freedom Group, so CalSTRS was satisfied.
Yet Cerberus still owns Freedom Group today.
“Two years ago, I was proud to support the effort of CalSTRS to divest from assault weapon manufacturers,” Chiang wrote this week CalSTRS investment committee chairwoman Sharon Hendricks. “I am frustrated that two years have passed and the Freedom Group remains in their portfolio, indirectly financed by the pension contributions of California teachers.”
Chiang acknowledged the pension fund is obliged to find sound investments, but “it must consider how those investments may be used to finance business interests that run counter to the beliefs of CalSTRS and its members.”
“We rightly determined that there is significant risk in investing in the Freedom Group, a business that manufactures weapons that are susceptible to sanctions, regulations, and actions that could be detrimental to the fund,” he wrote, urging the CalSTRS board to do whatever is necessary to fully divest from the Freedom Group.
Chiang also asked that Cerberus’ leadership attend the CalSTRS board meeting this Friday “to explain why the Freedom Group remains in its portfolio despite agreeing to remove it more than two years ago. It is vital that Cerberus understand the strong desire of CalSTRS, its Board, and teachers in California, that none of its funds be used to fund the manufacturing of weapons used to commit such terrible atrocities.”