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Guns and pensions

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Public pension trustees across the country are divesting their holdings in firearms’ manufacturers in the wake of the Newtown, Conn., elementary school massacre. The move by New York state’s comptroller and other fund officials might appeal to a sense of moral or social responsibility, but it must also be weighed against the funds’ responsibility to protect the financial interests of current and future retirees.

State Comptroller Thomas P. DiNapoli sold the New York State Common Fund holdings in Smith & Wesson Holding Corp. last month while holding onto its investment in Sturm, Ruger & Co. As the state Legislature was passing one of the nation’s most restrictive gun control laws, Mr. DiNapoli, the sole trustee of the $150 billion fund, announced he was freezing further investments since the “national movement toward greater regulation of firearms manufacturers will impose significant reputational, regulatory and statutory hurdles that may affect shareholder value.”

The California State Teachers’ Retirement System decided this month to sell its holdings in companies that manufacture guns and high-capacity ammunition clips banned in the state. The California Public Employees Retirement System plans to review its holdings next month.

The Philadelphia, Pa., city-employee pension fund has adopted a set of Sandy Hook Principles requiring that manufacturers, distributors and retailers such as Walmart back gun control measure, including universal background checks and other restrictions on firearm and ammunition sales before investing in their stock.

Chicago’s $5 billion pension fund is selling its investments, and Mayor Rahm Emanuel is taking the campaign a step further by calling on banks to stop offering credit lines to gun manufacturers. New York City’s pension fund trustees rejected a proposal to divest from all gun makers but adopted a narrower resolution divesting from makers of assault weapons and high-capacity ammunition clips.

The divestments recall the tactics used against tobacco companies in the 1990s in response to the anti-smoking campaign. Whatever impact it had, the real blow to the industry came from civil lawsuits filed by 46 attorneys general.

Public pension fund holdings in gun companies are small so it is questionable what impact the new policies will have on the gun industry, which last year did nearly $12 billion sales. Sixty percent went to civilians and the rest to the military and law enforcement.

The pension fund polices, though, are misdirected by putting the onus for gun violence on manufacturers. Selling off gun stocks might make good social policy, but it targets legitimate businesses selling a legal product for use by millions of recreational users and law-abiding people.

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