"Anti-ESG" investment firm hit with lawsuits

Hedge fund manager Vivek Ramaswamy has been climbing the presidential polls, thanks in part to his corporate successes.

Before his bid for the Republican nomination, where he's now ranked third after Donald Trump and Ron DeSantis, Ramaswamy established and led a pharmaceutical venture, Roivant, which went public in 2021. He then launched Ohio-based Strive Asset Management, a financial firm positioned as a right-leaning alternative to the ESG movement's emphasis on investments with environmental, social, and governance consequences. Its slogan, setting it apart from ESG, is “invest in excellence.”

However, recent legal actions from two ex-employees against the financial firm and its founders, including Ramaswamy and Anson Frericks, hint at potential issues within it. These suits allege that both founders aggressively prompted staff to break securities laws. Additionally, the company may not have achieved the desired results for its "anti-ESG" ventures.

Christopher Lenzo, representing ex-EVP Joyce Rosely, told Bloomberg that Strive might've been more of a publicity move to advance Ramaswamy's political aspirations rather than a genuine investment venture.

“[Strive]was founded, in retrospect, largely as a PR mechanism for the presidential campaign of Ramaswamy,” he said. “Not a lot of thought was given to running it as an investment firm.”

The lawsuits have yet to make mainstream headlines. But with an upcoming presidential debate, Ramaswamy’s history will be under the microscope. Allies of second-placed DeSantis' are bound to focus their criticisms on third-place Ramaswamy.

Strive responded by stating its commitment to robustly defend its position, and refraining from further comments due to ongoing litigation. Tricia McLaughlin, Ramaswamy's PR head, clarified the distinction between Strive and his campaign.

In one case, from Kansas, John Phillips accuses Ramaswamy of portraying an overly optimistic financial situation at Strive to stakeholders and staff, leading Phillips to resign from a lucrative position at JPMorgan based on these assertions. Philips was Executive Director and Client Manager at JP Morgan from 2014-2022. Before that he had roles as an SVP and Wholesaler at Fidelity Investments, where he started in 2000.

Another case from New Jersey's Union County cites Rosely's dismissal after she highlighted instances of sexual misconduct and potential securities law breaches at the firm. Rosely alleges her concerns were dismissed by Frericks, the then top executive at Strive. Like Phillips, she claims both founders encouraged illicit practices, with concerns about misleading sales materials and unlicensed securities salespeople.

Both were let go in March, with Rosely claiming age discrimination in the layoffs, as all those dismissed were over 40. She also believes it was retaliation against raising concerns about workplace issues.

After their exit in April, Matt Cole became Strive's CEO. By June, he recognized that the company, managing ETFs of approximately $1 billion, would pivot from political discourse to emphasizing "shareholder capitalism." A memo seen by Bloomberg indicated growth had slowed due to the firm's overly political stance but expected it to pick up pace by 2025.

Strive Asset Management fast facts;

Launched: May 2022

ETFs on US Markets: 10

AUM: $951m

Av. Expense ration: 0.28%

Largest ETF: Strive US Energy  $355m

Smallest ETF: Strive 1000 value $18m