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Republican attorneys-general from more than a dozen US states have accused BlackRock, Goldman Sachs and JPMorgan of misrepresenting the risks of investing in China, including the possibility of a Chinese invasion of Taiwan.
In a letter to the three firms and other big asset managers, including State Street, Invesco and Morgan Stanley, 17 attorneys-general said the financial groups were concealing or misrepresenting the investment risks in China.
“We are particularly concerned about BlackRock’s material misstatements and omissions, as BlackRock is the largest issuer of emerging market ETFs and China ETFs,” they wrote in a letter that focused on BlackRock.
“BlackRock implies that investing in China has similar risks to investing in other countries, even though China is a statutorily designated foreign adversary of the US and has threatened to invade Taiwan.”
The attorneys-general, who include the top state government lawyers from Texas, Montana, Ohio and Virginia, said the “misstatements or material omissions” by all the firms “prevent fiduciaries from being able to fulfil their duty of care to investigate the facts underlying an investment”.
The attorneys-general added that this made it impossible for state pension funds to invest in funds that have China exposure “without violating their fiduciary duty”. It noted that Texas governor Greg Abbott last year directed state agencies to divest from China “as soon as possible”.
State Street did not immediately respond to a request for comment on the allegations. BlackRock, JPMorgan, Goldman, Morgan and Invesco declined to immediately comment.
BlackRock has also come under pressure on Capitol Hill over its China investments. In 2023, the House China committee accused the world’s largest asset manager of profiting from investments in China that were allegedly enabling the People’s Liberation Army’s rapid military modernisation.
The attorneys-general said in their note that BlackRock’s prospectuses “universally fail to identify China as a foreign adversary” and fail to disclose the “material risk” of a possible Chinese invasion of Taiwan.
“These omissions harm investors, as such an invasion likely would result in the shuttering of BlackRock’s China-focused funds,” the letter said. “After the Russian invasion, BlackRock suspended its ‘emerging Europe’ fund — which is still suspended. It also liquidated its Russia ETF, and that fund’s holders received pocket change for their investments.”
BlackRock has previously said that it “complies with all applicable US government laws”, following enquiries from US lawmakers about its China-focused funds.
The letter, which was first reported by Bloomberg, said Chinese President Xi Jinping was “preparing the Chinese military to invade Taiwan by 2027”.
US intelligence officials say Xi has ordered the PLA to have developed the military capability to attack Taiwan by 2027, but US officials have stressed that this does not mean China will take military action at that time. In a recent interview with the Financial Times after stepping down as the US national security adviser, Jake Sullivan said: “I do not believe war is inevitable.”
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