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Pension funds sell holdings tied to gun manufacturers

By: Jamilah Espinosa

Blog Category: The Economics of Gun Control

Pension funds sell holdings tied to gun manufacturers

Following the tragedy in Newtown, Connecticut where twenty children and six adults were killed by a gunman at an elementary school, the debate on gun control increased. [1] Amid the debate, it was discovered that many U.S. teacher and public employee retirement funds had investments in gun manufacturers. [2] In response to the tragedy and debate, the California State Teachers’ Retirement System (CalSTRS), which is the second-biggest in the United States,  sold it’s stocks that were invested in gun manufacturing companies. [3] In January 2013, the CalSTRS sold $2.9 million of Smith and Wesson Holding Corporation and Sturm, Ruger, and Co. stocks that it held. [4] The New York City Teachers’ Retirement System, one of the largest pension funds in the country, followed suit in February 2013, and sold $13.5 million in investments it had in five manufacturing gun companies. [5] The New York City Teachers’ Retirement System attributed the decision to the school shooting in Newtown, CT. [6]

Conversely, the New York City Police Pension decided this March not to sell the approximate $10 million in investments it has in gun-related holdings. [7] The President of the Patrolmen’s Benevolent Association explained that the pension board had not found that the gun manufacturers had done anything improper regarding the Newtown tragedy and ultimately the primary responsibility of the board is to make reliable investments. [8] It is likely that the New York City Police Pension stood firm in retaining their gun-related holdings because of the financial success of the stocks. The New York City Teachers’ Retirement System sold its holdings, but kept the profits from the record gun sales of the last two years. [9] The sale of the gun-related holdings will have significant financial impacts on the pension funds, for example if the New York Teachers’ Retirement System purchased stocks of Smith and Wesson two years ago, the return on the investment would have been 200 percent. [10] It is still questionable whether other pension and mutual funds will follow suit in divesting their gun-related holdings.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race.

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[1] Hilary Russ, NYC teacher pension fund pulls money from gun makers, Feb. 15, 2013, available at http://www.reuters.com/article/2013/02/15/us-usa-guns-nyc-pension-idUSBRE91E0QV20130215.

[2] Id.

[3] Martin Z. Braun, New York City’s Police Pension Fund Won’t Sell Gun Holdings, Bloomberg, Mar. 7, 2013, available at http://www.bloomberg.com/news/2013-03-06/new-york-city-s-police-pension-fund-won-t-divest-gun-holdings.html.

[4] Id.

[5]  Russ, supra note 1.

[6] Id.

[7] Martin, supra note 3.

[8] Id.

[9] Michal Conger, NYC teacher pension fund sells stock in gun makers, but keeps the profits, The Examiner, Feb. 15, 2013, available at http://washingtonexaminer.com/nyc-teacher-pension-fund-sells-stock-in-gun-makers-but-keeps-the-profits/article/2521700.

[10] Id.

 

 

 

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