(Bloomberg) — Wells Fargo & Co.’s policies around the firearm industry are being probed by the Texas Attorney General’s office, a potential threat to the bank’s bond underwriting work in the state.
Leslie Brock, chief of the AG’s public finance division, sent a July 26 letter to lawyers who work on bond deals in Texas saying that officials are studying whether Wells Fargo has a practice or policy that “discriminates against a firearm entity or firearm trade association.”
The letter, obtained by Bloomberg News, is the latest salvo in the Lone Star State’s fight with Wall Street over its environmental, social and governance policies. The probe is tied to legislation passed in 2021 that restricts certain government contracts with companies that the state deems as hostile to the gun industry. The AG determined Citigroup Inc. “discriminates” earlier this year.
The office, which oversees most municipal bond offerings in Texas, will decide by Aug. 25 whether the bank is a “discriminating company.” Brock’s letter said the AG won’t block deals that Wells Fargo manages that are already in the works from closing before it makes the decision, as long as the bank confirms via email that it’s compliant with the legislation.
However, “if we determine that Wells Fargo is a discriminating company under Senate Bill 19, we will not approve any public security issued on or after that date in which Wells Fargo purchases or underwrites,” Brock wrote.
A spokesperson for the Attorney General’s office confirmed that the letter was sent. A spokesperson for Wells Fargo said in an email that the bank looks forward to the office reaching a final conclusion on the matter.
“We have been cooperating with the Texas AG’s Office and continue to affirm our standing letter that was provided to that Office,” the bank said.
The bank is the 15th-biggest underwriter in Texas, down two slots compared to last year, according to data compiled by Bloomberg.
Texas is the No. 1 market for municipal-bond sales so far this year, making it key for banks’ public finance divisions. Issuers in the state have sold over $34 billion of municipal bonds in 2023.
Wells Fargo had previously been seen as a gun-friendly bank, and has worked with the National Rifle Association in the past. In 2021, though, Chief Executive Officer Charles Scharf told a Congressional committee that the bank was ending its relationship with the NRA.
(Updates with details on Texas bond market in the eighth paragraph)
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