LOS ANGELES (CBSLA.com) — The California state treasurer has ordered a review of state pension fund investments connected to a company that manufactures firearms after learning one of its guns was used in the Connecticut school shootings.
State Treasurer Bill Lockyer has asked CalPERS and CalSTRS staff to review all the funds’ investments in the wake of the shooting on Dec. 14 at Sandy Hook Elementary School in Newtown, Conn. that left 28 people dead.
Lockyer told KNX 1070 NEWSRADIO he wants the state pension fund to follow the lead of other investment firms that are moving their money away from companies that manufacture guns which cannot legally be sold in California.
The news comes as the CEO of investment firm Cerberus Capital Management announced Tuesday that he’s selling the gun manufacturing company Freedom Group, which makes one of the semiautomatic rifles used in Friday’s shooting. Stephen Feinberg may have made the decision so as not to lose teachers as investors. Feinberg’s 86-year-old father also reportedly lives in Newtown.
“That fund that had owned Bushmaster and other gun companies – some of whom were manufacturing weapons that are illegal in the state of California – has decided to sell their holdings and not invest in that industry,” Lockyer said.
CalSTRS, the state teachers retirement fund, said in a statement that it would review its relationship with Cerberus.
““The tragic and devastating acts that took place Dec. 14 at Sandy Hook Elementary School in Connecticut have prompted many in this country to call for change: To determine what we can do differently to help ensure the unthinkable never happens again,” the statement read.
“In our case, CalSTRS investment staff immediately began reviewing our investments in private equity funds managed by Cerberus Capital Management (Institutional Series Three and Series Four) that are invested in the Freedom Group, which manufactures firearms. Our investments staff also initiated discussions with Cerberus to learn more about the facts surrounding the investments.”
KNX 1070’s John Brooks reports CalSTRS – which first began investing with Cerberus in 2003 – held $600 million in the private equity firm.
20-year-old Adam Lanza reportedly used a Bushmaster AR-15-style rifle to kill 20 children and six adults at Sandy Hook Elementary after shooting and killing his mother in their home. He also had a Sig Sauer and a Glock but did not use those weapons in the attack, police said.
Lockyer – who serves on the governing boards of both pension funds – called the pension investments “fairly modest”.
“But it still violates our risk policies and public sensibilities about what happened in Connecticut,” he said.
While there was mixed reaction to the Treasurer’s decision at the state office building in downtown Los Angeles, one state worker warned more analysis was needed before divesting workers’ pension funds.
“You have to make an informed, educated decision about things,” she said. “You can’t just say, ‘I don’t like that’.”
Claremont McKenna College political science professor Jack Pitney said this was a way to avoid the politics and constitutional questions posed by gun control legislation.
“It’s a way at getting at the gun control issue without passing new gun control,” Pitney said. “This is exactly the kind of pressure that gives them enormous leverage over corporate decisions.”