Industry Updates

Conservative MP attacks ‘flashy’ Fink and calls for tighter regulation of ETFs

Marcus Fysh MP labels passive investments “moral and financial disaster”

Theo Andrew

a man in front of a house

Conservative Member of Parliament (MP) Marcus Fysh has called for tighter regulation of passive investment vehicles which he labelled a “moral and financial disaster”.

In a Twitter tirade directed at BlackRock CEO Larry Fink last week, the MP for Yeovil and South Somerset said passive investments should be “regulated differently” to ensure shareholder rights are devolved to the investors “rather than the managers”.

Fysh (pictured), who was forced to apologise to the Jewish community last December after liking proposed COVID-19 health passes in the UK to “Nazi Germany”, said passive investments “buys with no thought for price”, adding Fink had no right to speak to passive investors after making their “lives poorer, colder and more authoritarian”.

Fysh was responding to a Fox New’s video clip titled The Corporate Hypocrisy of BlackRock and Larry Fink which was attacking the CEO for forcing companies to bend to its “woke orthodoxy”, which he argued were misaligned with its millions of investors.

Before being elected as an MP in 2015, Fysh worked for Mercury Asset Management which was acquired by BlackRock in 2006.

“As someone who used to work for part of what became BlackRock, and indeed Larry Fink, I can confirm that his investment empire is almost all passive investors for whom he should have no right to speak let alone make their lives poorer, colder and more authoritarian,” he tweeted.

“Passive investment is both a moral and financial disaster as it buys with no thought for price. It needs to be regulated differently with shareholder rights devolving fully to those investing in the schemes rather than their managers.”

Responding to a tweet by a financial adviser noting the relative outperformance of passive vehicles over ‘flashy’ active managers, Fysh wrote: “You think Fink is not flashy? Do you know what happens if a market price is increasingly set by buyers who have no concern as to price?

“How much do you make on commission stuffing people into wildly overpriced markets with no consideration as to price and concentrating the lending of their stock into the hands of two very rich players whose supply of it is cheap until it's non-existent?”

Fysh made the claim while promoting currently unregulated cryptocurrency Cardano in his Twitter bio.

Last October, BlackRock announced plans to enable institutional investors in certain strategies to vote directly with companies, with a view to eventually rolling it out to all of its investors.

However, in his most recent annual letter to CEOs, Fink defended stakeholder capitalism stating it was not “woke” but driven by mutually beneficial relationships companies rely on to “prosper”.

In January, a report was published calling for market and regulatory intervention to curb the shareholder opportunism of BlackRock, Vanguard and State Street Global Advisors (SSGA) – known as the ‘Big Three’ – who use their voting power as a marketing tool.

It found the three asset management giants do not always vote to maximise investor portfolios but instead to attract more millennial investors as they jostle for market share of the $24trn great wealth transfer.

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