Citigroup Inc. will no longer be allowed to operate in the roughly $3.4 billion municipal bond market in the state of Texas. Texas Attorney General Brent Paxton announced in December that he would investigate to determine whether Citi discriminates against gun manufacturers.[1]

This investigation stems from a 2021 initiative that Governor Abbott signed into law, which prohibits companies bidding for state contracts to not have discriminatory policies in relation to the firearm industry. [2] The Firearm Industry Nondiscrimination (FIND) Act of 2021 provides for the Attorney General to investigate compliance. [3]


This is not the first time that Paxton has used his office to go after what he considers “woke” corporations operating in Texas. [4] For example, he has investigated the S&P for using ESG factors in credit ratings. The S&P initiative is an ongoing investigation by multiple red state attorneys general, the inquiry relates to state level consumer protection laws. [5]

Paxton has also been part of an investigation into Morningstar for potential violations of consumer protection laws and for potentially violating anti-BDS legislation. [6] He also signed onto a multi-state letter to Blackrock over its ESG-based investment strategies, which some attorneys general claim may run afoul of public sector investment regulations. [7] I covered the August 2022 letter at the time. [8] Paxton also filed a federal lawsuit against the Biden Administration and the U.S. Department of Labor last month in relation to ESG policies. [9]


When the FIND was signed into law in 2021, Citi seized doing work with municipalities in Texas for a time. [10] After a couple of months, Citi determined that it was in compliance with FIND. [11] In recent times, Texas localities have been wary of working with Citi, evidently based on the concern that the company is non-compliant with the law. [12]

In December, Paxton announced an investigation into Citi in relation to FIND. [13] Last month, his office announced that Citi was actively discriminating against the firearms industry. [14] This past Thursday, Texas Natural Gas Securitization Finance Corp. voted to remove Citi from a $3.4 billion municipal bond deal as a result of the investigation. [15]

The FIND Act is a fairly straightforward piece of legislation. [16] It states, in part, a company discriminates against a firearm entity or trade organization when it, refuses to work, refrains from work, terminates a relationship with, or otherwise expresses some prejudice against the group. [17] After the Parkland shooting in 2018, Citi announced that it would take certain measures in response. [18] For example, it would generally restrict funding to entities involved with selling bumpstocks, firearms without background checks, or to those under 21. [19]


It will continue to be interesting to follow how red state attorneys general attempt to use their offices, often in conjunction with legislation, to sprearhead anti-ESG initiatives. At the end of the day, red states revoking access municipal bond markets, pension funds, and similar entities, may leave major corporations without much of an option. Notably, UBS was also taken off of the deal. It will be interesting to see how Citi and others decide to move forward with this news.