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Montana ‘going to get some answers’ on firm’s alleged anti-Israel practices

“This one means a lot to me personally,” Austin Knudsen, the state’s attorney general, told JNS about the accusation that MSCI penalizes Israeli banks that operate in Judea and Samaria.

Montana Attorney General Austin Knudsen speaks during a rally for Republican presidential nominee, former U.S. President Donald Trump at the Brick Breeden Fieldhouse at Montana State University on Aug. 9, 2024 in Bozeman. Photo by Michael Ciaglo/Getty Images.
Montana Attorney General Austin Knudsen speaks during a rally for Republican presidential nominee, former U.S. President Donald Trump at the Brick Breeden Fieldhouse at Montana State University on Aug. 9, 2024 in Bozeman. Photo by Michael Ciaglo/Getty Images.

Montana’s attorney general told JNS that the state is “going to get some answers, and I think we’re going to change some behavior here,” after it opened an investigation into potential anti-Israel practices at the major financial firm MSCI.

Austin Knudsen, Montana’s top legal officer, announced the investigation last week, citing JNS reporting on the New York-based firm, based on “Montana’s Unfair Trade Practices and Consumer Protection Act which prohibits discriminatory business practices.”

Iowa’s attorney general announced a similar investigation last week and issued a subpoena demanding documents and other relevant information. Tennessee also opened an investigation, the Washington Free Beacon reported.

JNS reported last week that MSCI’s public website suggests that it lowers ratings of Israeli banks that conduct business in Judea and Samaria, while it does not do so with Chinese banks operating in Xinjiang Uygur Autonomous Region, where Washington has assessed that China is committing genocide against the ethnic Uyghur population.

A source with knowledge of MSCI’s practices told JNS that information that is available to MSCI clients indicates that the firm penalizes four Israeli banks with “severe controversy” scores.

The banks were docked for providing banking services and financing to residents and businesses that operate in eastern Jerusalem and in Judea and Samaria, which some countries considered “occupied territory,” and MSCI used anti-Israel sources to document those alleged violations, according to the source. (JNS sought comment last week from MSCI.)

Knudsen told JNS that his office sent MSCI a Civil Investigative Demand, an “administrative subpoena,” seeking a response detailing the firm’s practices dealing with Israeli parties, including in its environmental, social and governance (ESG) ratings, which it provides to socially conscious investors and which are at the heart of its alleged anti-Israel practices.

Although the Montana attorney general’s office has the power to subpoena, “we typically don’t have to go that far,” Knudsen told JNS. He said that the state has “quite good luck using this tactic and using our state statutes to really nip this stuff in the bud.”

JNS asked Knudsen if it was possible from his perspective that MSCI didn’t intend for its ratings and sources to treat the Jewish state unfairly.

“I definitely think it’s intentional. I’m not willing to give them the benefit of the doubt that they just didn’t know what they’re doing,” he said. 

“Anytime you’ve got an organization that is giving a lower ranking to banks located in Israel than they are banks located in Communist China, I think that’s pretty overt,” he added. “I think they know exactly what they’re doing here.”

‘Not to engage in overtly political activity’

A group of 18 state attorneys general, led by Florida, has been investigating MSCI since March after JNS reported that the firm penalized Israeli defense manufacturing giant Elbit for constructing security and surveillance barriers designed to protect Israelis from terror attacks.

Montana does not have any anti-BDS legislation on the books, which is why Knudsen is citing the Treasure State’s trade and consumer protection legislation, under which, he told JNS, “your job is to make money for your investors, some of whom are Montana residents.”

“Your job is not to engage in overtly political activity like this,” he said.

Montana has investors engaged with MSCI, giving it legal standing, the attorney general told JNS.

Before his term as attorney general, Knudsen was the speaker of Montana’s state House and led the effort to pass anti-BDS legislation. 

Bills forwarded in the legislature have failed, with those opposed citing free speech or free trade reasons.

Knudsen says it’s an issue about which he is still “quite passionate” in his current role. “This one means a lot to me personally, so I’m pretty fired up about this,” he told JNS.

MSCI has until Sept. 27 to reply to Montana’s investigative demand and until Sept. 18 regarding Iowa’s subpoena.

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