In other settlement news, Ross Kerber of Reuters reported yesterday that Vanguard had settled antitrust claims with Texas Attorney General Ken Paxton and other state AGs. Here’s more detail (also see this WSJ article):

Vanguard Group will pay $29.5 million and bolster its passive investing approach in order to settle a suit by 13 Republican state attorneys general claiming the fund manager and rivals violated antitrust law through their climate activism.

The suit in U.S. District Court in the Eastern District of Texas has been closely watched as a test of how far Republicans from energy-producing states would push Wall Street firms they accused of overemphasizing environmental matters.

BlackRock and State Street are co-defendants and aren’t part of the settlement. The claims were based on the investors’ membership in investor coalitions focused on climate change commitments, but the investors have already backed away from those. So, the settlement is premised on “passivity commitments.” Vanguard issued this statement – here’s an excerpt:

The terms of the agreement to settle this litigation reaffirm our longstanding practices and standards and the passive nature of our index funds. The settlement also recognizes our innovative Investor Choice program as a tool for empowering investors and bringing new voices into the proxy voting ecosystem. Investor Choice is the largest proxy voting choice program in the world, empowering 20 million index fund investors across more than $3 trillion1 in assets to make their voices heard.

It’s not entirely clear to me what “passivity commitments” means and whether it will affect how Vanguard votes. Maybe it just means the AGs are watching extra close and will swoop in if they see the asset manager support a climate-related shareholder proposal. At any rate, it’s worth noting that institutional investor support (or lack thereof) is another factor to consider in whether to put Rule 14a-8 shareholder proposals in the proxy.

– Liz Dunshee