Presidential candidate Vivek Ramaswamy made a name for himself as someone who wanted to separate politics from investing.
But in October, just four months before mounting his Republican bid for the White House, Ramaswamy tried to inject politics into the process for investing South Carolina’s pension coffers.
He met privately with both S.C. Statehouse Republican lawmakers and the state’s pension managers to rail against "woke" investment strategies that consider green energy as well as social issues. And Ramaswamy used the occasion to pitch the services of the right-leaning investment firm he co-founded. Details of the Oct. 27 session, arranged by S.C. Treasurer Curtis Loftis, have not been previously reported.
Emails examined by The Post and Courier show Ramaswamy sought to leverage his GOP connections to gain access to lucrative contracts to manage pension funds that serve roughly one out of nine state residents. Those coffers have total assets of $39.6 billion.
The "anti-woke" strategy his company offers has been embraced by conservatives across the nation. But banking experts warn that it limits a state’s investment options and carries the potential for higher fees, undercutting potential returns to help retirees. It's also more perilous because it artificially favors conservative-leaning industries, like fossil fuels and weapons manufacturers, which carry higher risk, experts say.
That could spell more trouble for South Carolina’s pension funds, which have been chronically underfunded for years and rank poorly against those of other states. The state has a long history of paying above-average costs for below-average returns.
Some 30 other states made moves to follow a similar investment strategy last year, with 10 codifying it into law, according to a new report from the environmental group Pleiades Strategy. South Carolina is mulling a bill to follow suit.
Some states that have followed this path, including Texas, have found themselves paying $300 million to $500 million more in additional interest to switch their investment strategy. In Kansas, an anti-ESG bill is progressing in the legislature even though the state’s own analysis said it could reduce pension returns by $3.6 billion over the next decade by taking funds away from its current diversified portfolio to a less diversified, right-leaning one.
S.C. Treasurer Curtis Loftis arranged for entrepreneur Vivek Ramaswamy to speak with state pension managers in October. Loftis is seen here addressing the Aiken Republican Club in 2019. File/Aiken Standard
Still, "anti-woke" asset managers stand to personally gain from this wave of interest.
No contracts with Ramaswamy's company have yet been inked in South Carolina. However, emails obtained by the watchdog group Documented show that the CEO of the S.C. pension commission, Michael Hitchcock, requested information about the financial services of Ramaswamy’s company during the meeting. The session occurred a few hours after Ramaswamy met with the Republican House Caucus about a GOP-pushed bill limiting so-called "woke" investing, which is more formally known as ESG investing.
State officials have since followed up with the company, Strive Asset Management, and told The Post and Courier that the firm remains a possible candidate for state investment contracts.
Ramaswamy co-founded Strive in the spring of last year and told CNBC at the time that his business would be an alternative to so-called "woke" asset managers, "focus(ing) on excellence over politics."
The meaning of "woke" is difficult to define. Originating in the African American community and adopted by the social justice movement, the term initially described someone who was "socially aware" or alert to prejudice and disparities. But, increasingly, conservatives have used it as a catch-all term to deride progressive or liberal causes they consider to be radical.
But government watchdogs and finance experts say the closed-door meeting officials had with Ramaswamy in Columbia had problems beyond defining the essence of "woke." They say it represented a troubling intersection between politics and state commerce, with the safety net for state retirees hanging in the balance.
Part of a pattern
Ramaswamy was able to arrange the meeting with pension officials and state lawmakers after developing a relationship with Loftis, the state’s Republican treasurer since 2011.
Ramaswamy and Loftis shared a distaste for an increasingly popular way to invest funds — dubbed ESG because environmental, social and governance factors are taken into account, as well as projected financial returns. ESG investments, for example, might allow customers to avoid owning stock in coal companies or gun manufacturers, reducing demand for those stocks. Beyond that, ESG investors prompt companies to address pollution management, carbon emissions and workplace diversity — sometimes through votes at annual shareholder meetings.
Proponents of ESG — who include the CEOs of Fortune 500 companies such as Nike as well as the nation’s largest banks — say that ESG is a way to make equal return on investments while simultaneously advancing human well-being, like lowering toxic greenhouse gas emissions.
Opponents, including Ramaswamy and Loftis, argue that ESG is part of a larger political scheme to inject left-leaning policies into America’s financial system. They argue that only shareholder pockets should be considered when investing.
Loftis has blasted the strategy as "neo-Marxist" in emails circulated in the treasurer’s office and reviewed by The Post and Courier.
Two months before Ramaswamy’s October visit, Loftis announced that the state would divest $200 million from pro-ESG investment group BlackRock. The divestment was completed just days before Ramaswamy came to town.
Loftis said he can’t recall where he met Ramaswamy, but they were both at the annual conference of the State Financial Officers Foundation in early 2022. Ramaswamy was talking about his book, "Woke, Inc.: Inside Corporate America's Social Justice Scam," which Loftis said he had read.
Loftis said they shared a common ground on the subject of ESG and a shared pride for stepping out of mainstream investment thinking.
“We are the outcasts, Vivek and Curtis,” said the treasurer, talking in the third person.
Who is Vivek Ramaswamy?
The 37-year-old candidate was born in Ohio to Asian immigrant parents and has talked about gaining his wealth as a pharmaceutical entrepreneur. He speaks often of his business success and net worth as evidence of his investment prowess. But critics have questioned both the size of his stated wealth and his business record.
In 2022, Ramaswamy became the leading voice of a GOP backlash against the investment practice, or what he has called “woke banking.” He has argued against the practice in print and broadcast media dozens of times.
In early October, Loftis invited Ramaswamy to speak with GOP lawmakers about a state anti-ESG bill being drafted at the time. He also invited Ramaswamy to meet with the staff of the Retirement System Investment Commission, the board that manages public pensions.
Ramaswamy immediately responded by email, accepting both offers, but suggested he meet directly with the retirement commission's board members. Loftis obliged.
Ramaswamy has employed a similar strategy in other conservative-leaning states, publicly engaging with state lawmakers to push for anti-ESG bills while simultaneously pitching Strive’s private anti-ESG services behind closed doors.
Documents reviewed by The Post and Courier show that Ramaswamy met with elected officials and pension board decision makers in at least seven states where anti-ESG legislative efforts grew: Missouri, Alaska, Utah, West Virginia, North Dakota, Oklahoma and South Carolina.
Direct meetings between pension board CEOs and Ramaswamy occurred only in two states, Missouri and South Carolina.
In South Carolina, the meetings were held in-person in the S.C. treasurer’s personal office suite in the capital city. Loftis privately invited participants.
No one from the public or news media was in attendance.
An ‘open meeting’?
Loftis said two pension commissioners showed up to the Oct. 27 meeting, but he doesn’t recall who. Michael Hitchcock, CEO of the pension commission, also attended. Since less than half of the commission's eight members attended, the gathering did not constitute a quorum and, therefore, was not subject to the state’s laws that the meeting be public.
Ramaswamy was accompanied by at least three Strive employees, including his high school pal and long-time business partner Anson Frericks, according to email correspondence. Frericks co-founded Strive with Ramaswamy in May 2022 and took the helm of the company in late February of this year when Ramaswamy stepped down to run for president.
The substance of that meeting, according to Loftis, was “to spend a little time defining at a more granular fashion what Strive did at the time." He said he was aware Ramaswamy was bringing an entourage of Strive employees.
Loftis told The Post and Courier there was “nothing improper” about the private October meeting.
"There were talks about what Strive’s services did or were trying to do … but those conference doors were open," Loftis told the newspaper. "Anyone could have come in … y’all could have come, had I known.”
The sun sets on March 4, 2023, casting shadows on the Wade Hampton Building in Columbia where the S.C. treasurer's office resides. Clare Fieseler/Staff
Loftis’s office did not invite journalists to the meeting. It also was not publicly advertised or announced on the treasurer’s office website.
Jay Bender, a longtime attorney for the S.C. Press Association, said the gathering hardly met the spirit of the state's Freedom of Information Act.
"Calling it an 'open meeting' that you don’t tell anybody about seems to be twisting the meaning of 'open meeting' into a pretzel shape," said Bender, who also taught law for many years at the University of South Carolina.
State law bars lobbyists from coming to the commission's board members directly to promote or suggest investment products. But Ramaswamy is not a registered lobbyist.
Still, the meetings raised eyebrows among government ethics experts.
"I think it does raise a question of whether he’s engaged in unregistered lobbying," said John Crangle, a longtime South Carolina government watchdog.
Tricia McLaughlin, Ramaswamy’s campaign manager for his presidential bid, disagreed with that notion, saying asset managers from legacy firms like BlackRock meet with state treasurers on a regular basis. If anything, McLaughlin said, Ramaswamy was trying to inject some competition into the process.
“There's absolutely nothing wrong with that,” she said.
Ramaswamy used a similar approach in Missouri with even greater success.
Last year, he spoke with members of that state's pension board at what the panel dubbed an “educational conference.” He spoke despite concerns circulated by some of retirement system’s board members and staff via internal emails.
Documents reviewed by The Post and Courier show that the system’s CEO didn’t want to invite Ramaswamy to the purely educational conference because he was “actively recruiting” the state to invest with Strive.
The week after Ramaswamy addressed the board, the body announced it would be changing how it votes at annual stakeholder meetings for the companies in which it invested pension monies. The voting now happened in manner consistent with Ramaswamy’s anti-ESG approach.
Missouri later announced a $500 million divestment of assets from BlackRock, the world’s largest investment and asset management firm. That’s another anti-ESG move championed by Ramaswamy, who has made the Wall Street behemoth a prime target of his television appearances, calling it an activist for “left-wing social causes.”
BlackRock has consistently posted top returns for investors, and its CEO has defended its ESG approach, like diversifying investments away from polluting businesses, as “just capitalism.”
Daniel Garrett, professor of finance at the Wharton School at the University of Pennsylvania, has studied how anti-ESG divestment at the state level has entangled investment decisions and politics.
“If you can corner a part of the market by creating these anti-ESG bills, you increase your market power,” said Garrett. “And then you’re getting more people into those anti-ESG funds. That’s how it works.”
In Indiana, for instance, Ramaswamy secured a $150,000 consultancy contract with the state’s right-leaning pension commission, making $4,000 an hour for this work before resigning from the company, according to reporting by the (Indiana) Capital Chronicle.
This is the first known contract between Strive and a state pension system. There are likely others.
Drumming up business
South Carolina has not committed to any deals with Strive, but communications obtained by The Post and Courier show conversations about a possible investment relationship carried on for months after the meeting in Loftis’ office. Emails show there was immediate follow-up between Ramaswamy, members of his entourage and the managing director of the pension system requesting information about Strive’s services.
Two months after the October meeting, one of Hitchcock’s staffers followed up again with Strive, initiating a phone call with its executives and the state pension commission staff. Ramaswamy was still the executive chairman of Strive at the time.
Emails from January suggest that the pension commission is actively mulling changing “providers” for some of their investment contracts, with Strive under consideration for that role. A Strive executive responded to the follow-up phone call by thanking the pension commission’s managing director for “moving the needle on this important issue,” alluding to the movement of funds away from mainstream investment firms like BlackRock.
Frericks, Strive's current CEO, told The Post and Courier: "Strive is working with multiple other states. … We welcome the opportunity to work with South Carolina."
In March, after Ramaswamy announced his run for the White House, he inserted himself again into Palmetto State politics.
He appeared virtually to testify in favor of the anti-ESG bill before an S.C. Statehouse subcommittee. The proposal later passed a House vote and advanced to the next legislative term.
Loftis said he wasn’t bothered that Ramaswamy tried to drum up business with the pension system manager after the meeting in his suite.
“It was an open meeting. If he’s attempting to sell products afterwards, then good for him,” said Loftis. “He took advantage of that relationship, which is what everybody does.”
Hitchcock, the CEO of the pension commission, also downplayed the significance of Ramaswamy’s pitch, saying “asset managers do this all the time.”
McLaughlin, Ramaswamy’s campaign manager, said that at the time of his October visit, the GOP presidential candidate held a majority stake ownership of Strive. She wouldn’t say whether that is still the case or how much Ramaswamy could gain if a deal is penned with the state down the road. She noted that, as a presidential candidate, “his finances are now handled by a third party.”
The conversations come at a particularly heated and politically fraught time in the debate over how much consideration should be given to climate change and related issues when investing pension funds.
Earlier this year, the U.S. Labor Department issued a final rule authorizing pension managers to voluntarily consider these factors when making investments. The GOP-led House then passed a bill blocking those considerations from playing a role. President Joe Biden quickly vetoed that bill, saying retirement plan managers should be able to consider any investment factor that might benefit retirees' bank account.
"That is not controversial — that is common sense," Biden said.
Others, such as Loftis, disagree. He has belittled ESG efforts among other state financiers in internal emails and has accused large investment groups of trying to pressure states “to adopt their Leftist worldview.”
Loftis signed on to a sharply-worded letter with other Republican state treasurers addressed to Biden’s climate special envoy, John Kerry, after he advocated for the greenhouse gas cutting benefits of ESG in early 2021.
One risk in divesting funds from mainstream asset managers, like BlackRock, is higher fees.
Jeffrey Sonnenfeld, a senior associate dean and business professor at the Yale School of Management, said that the large companies charge very low fees for investing in their portfolios of exchange-traded funds, or ETFs. The ETF, also called index funds, are traditional low-fee financial products. But the anti-woke managers come at a premium.
According to Sonnenfeld’s research, BlackRock’s ETFs usually charge 0.03 percent in annual fees on their gross return. Strive confirmed that its fees are higher at 0.41 percent. And that difference adds up.
If a pension system grossed $100 million in returns on, say, energy-focused ETFs, BlackRock would charge the state $3,000 in annual fees. Strive could send a bill for $41,000.
‘Money in the bank’
On the campaign trail, Ramaswamy has boasted about his nine-figure net worth, making his wealth his calling card — proof of his outsized business acumen to convince states to switch to Strive’s services.
Last month, he told South Carolina's FITSNews that his net worth was $630 million and that he is “self-funding the campaign." He used his wealth to lambast former S.C. governor and fellow presidential candidate Nikki Haley, saying he has “twice the money in the bank.”
A June 14 poll by Quinnipiac University shows that Ramaswamy still ranks behind Haley among Republican and conservative-leaning voters, registering in the single digits in a contest still dominated by former President Donald Trump.
Sonnenfeld, the Yale dean, began digging into Ramaswamy's finances after he became frustrated by what he contends are claims of exaggerated wealth by the candidate.
“Based on his tax returns, his net worth can’t be more than $100 million or $200 million,” said Sonnenfeld, who obtained 11 years of the candidate’s tax returns, from 2009 to 2020, and posted them online. Ramaswamy’s campaign has publicly disclosed them, too.
Sonnenfeld recently wrote about Ramaswamy’s questionable business record and self-proclaimed net worth for Fortune Magazine. He’s also written about how self-proclaimed “anti-woke” businesses are charging their customers more money than mainstream businesses.
Tax returns published online by Yale show that Ramaswamy only received substantial influxes of cash in 2015 and 2020, both times for selling pharmaceutical assets. The New York Times recently investigated Ramaswamy’s business record, describing a pattern of "generating hype" for risky drugs. On one occasion, he cashed out before an overpromised Alzheimer's drug famously failed, costing shareholders millions, the newspaper reported.
McLaughlin, of Ramaswamy’s campaign, told The Post and Courier that most of the candidate’s wealth is tied up in stock, most of it in Roivant, a company he co-founded.
Sonnenfeld believes there is a direct connection between what he perceives to be exaggerated claims of wealth and financial expertise and why Ramaswamy privately met with some of S.C.’s pension board members.
He said that it’s part of a pattern of using the Republican spotlight — and trending soundbites — to enrich his own business.
“He presents himself as a neutral financial expert,” said Sonnenfeld. “But I think his primary goal here is financial gain.”
Meanwhile, Loftis' goal with ESG seems aligned with what he views as a left-versus-right culture war that he feels is hurting "the working man." In an extended interview with The Post and Courier, Lofitis said that ESG "is a totalistic view of the world imposed by the government, by Wall Street and by international treaties." He listed many things that he sees as a functions of ESG, including income inequality, Pride month and the Federal Reserve Bank of Chicago.
For these and other reasons, Loftis said he is on Trump’s S.C. leadership team for the former president’s current campaign. While he aligns with Ramaswamy on many views, he said he doesn’t want to see Ramaswamy win the presidency in 2024.
The treasurer added, with a laugh, “But vice president? Maybe.”
