A faith-based investment advisory firm with about $2.3 billion in managed assets is joining a lawsuit filed by former Trump administration officials against Target after a conservative backlash to its LGBT Pride campaign earlier this year.
Inspire Advisors joined the suit filed in August by America First Legal, a law firm founded by Stephen Miller, a former senior advisor to President Donald Trump. Board members include Mark Meadows, Trump’s White House Chief of Staff, Gene Hamilton a former counselor to the Attorneys General and former OMB Director Russ Voght.
The suit accuses Target of losing shareholders and investors millions of dollars through its support of a Pride Month campaign “all but calculated to offend Target’s customer base.”
In a statement, Inspire Advisors CEO Robert Netzly framed their joining the suit as a warning to companies.
“As faith-based investors, we are sending a message to Target and any other company watching on the sidelines that we expect companies to act ethically and uphold their fiduciary duty to shareholders and will hold them accountable as such,” Netzly said.
But in a motion to dismiss, Target argued the plaintiffs’ claims completely failed, noting that securities laws protect investors against instances of fraud, but “they are neither vehicles for expressing disapproval, nor do they insure investors against ordinary market losses.”
“Because Plaintiff’s dispute with Target is, at bottom, a complaint about its business judgment, he fails to state a securities claim,” Target’s attorneys argued.
The suit’s plaintiffs include several purported Target shareholders, including Brian Craig, who resides in Florida (where the complaint was filed). They claim that Target focused on social and political risks while shortchanging the risk of a conservative backlash to clothing and displays highlighting LGBTQ representation. Inspire Advisors claims it “previously warned Target of the risks of its ESG/DEI mandates and LGBT activism,” according to the suit.
Throughout the complaint, America First Legal’s attorneys cite a “confidential witness” they claim was previously a senior marketing executive at the company, overseeing marketing efforts for a “large region” of Target stores. This witness claims Target’s Pride Campaign in 2023 “was more expansive and aggressive” than previous years and resulted in consumer backlash that negatively impacted Target’s stock price. The company’s stock fell more than $25 per share over several weeks in May, but has since partially recovered, due in part to stronger-than-expected third quarter earnings.
According to Target, Craig and the other plaintiffs cite the company’s 2022 and 2023 proxy documents released ahead of their annual shareholder meetings as evidence that the company shortchanged conservative criticism.
Target questions Craig’s claim that he relied on “certain alleged misstatements” in the 2022 Proxy when opting to purchase Target securities “but fails to explain how it is possible that the first alleged misstatement—the 2022 proxy—was issued two weeks after Plaintiff's purchase,” according to Target’s motion.
Target is far from the only company facing suits from Miller’s law firm; in previous months, they’ve pursued lawsuits and other complaints about companies’ so-called “woke” diversity initiatives, with targets ranging from American, United and Southwest Airlines, Macy’s, New York University, Kellogg’s and NASCAR.
The Idaho-based Inspire Advisors supports Christian advisors hoping to run their practices with “diligent, biblically responsible investing alignment.” The firm’s values-based investing strategy examines recommendations through its “Inspire Impact Scores.”
According to its site, the firm grants positive scores for products touting “employee health and safety,” “systemic risk management” and “physical impacts of climate change,” while steering away from corporations that invest in philanthropy and advocacy for things like abortion rights, in vitro fertilization and LGBTQ-related issues.
Target has until Jan. 26, 2024 to respond to the amended complaint.
