Yale Investments in Companies Selling Arms to Israel Violate State Law, Says an Official Complaint

Yale University’s investments in weapons manufacturers violate Connecticut state law, organizers at the school allege in a complaint filed Wednesday with Connecticut Attorney General William Tong.

The complaint asks the attorney general to investigate Yale’s refusal to heed campus protesters’ calls for divestment from military weapons manufacturers and suppliers amid Israel’s ongoing war on Gaza.

“Financially prudent investments may be ineligible for investment if they are deeply incompatible with the University’s mission and purposes,” the complaint says, citing state law and the university’s own investment policies.

“Financially prudent investments may be ineligible for investment if they are deeply incompatible with the University’s mission.”

Universities around the country are facing lawsuits and federal complaints over their handling of protests against the war. This is the first complaint seeking a state investigation into a university over its refusal to divest from the military industry in relation to the war, according to the organizers. 

The organizers allege that Yale trustees breached their fiduciary duties by maintaining investments that expose the university endowment to profit from military weapons manufacturers and suppliers aiding war crimes by Israel.

While Yale Corporation, which manages the university endowment, does not disclose the vast majority of its $40.7 billion endowment, organizers say at least $4 billion of that is tied to manufacturers and suppliers of military weapons. The scant public filings with the Securities and Exchange Commission — 99.7 percent of Yale’s endowment is not publicly disclosed — show that the university has more than $110,000 invested in military weapons manufacturers and contractors with the Israeli military, Yale Daily News reported last year. 

The investments include money in funds that hold shares of weapons companies like Raytheon, Boeing, and Lockheed Martin. 

The complaint alleges that these investments violate both the fiduciary duties of institutional investors outlined in state law and the university’s own investment policies, which call for divestment from companies that “violate, or frustrate the enforcement of” domestic and international law. (Neither the Connecticut attorney general’s office nor Yale immediately responded to requests for comment.)

Almost every state has a law requiring that institutions managing money for tax-exempt nonprofits have to consider the purpose of those charitable organizations in making its investment decision, meaning that the spirit of those choices must be in line with the Internal Revenue Service’s general understanding of charity as providing relief for those in need, or supporting public, educational, or religious work. 

The law does not explicitly prohibit investments in any specific industry like defense or weapons manufacturing, said attorney Ellis Carter. 

“The only exceptions would be if a donor-imposed restriction expressly limits certain investments with respect to a particular gift or the university has adopted an internal policy incorporating ethical, environmental, or social considerations into its investment strategy,” Carter said. 

Yale’s investment guidelines are outlined in “The Ethical Investor,” a 1972 book written by a former Yale Law School professor which the university endowment advisory committee uses to guide its work. Yale University has previously interpreted its own investment guidelines to require divestment from companies assisting in genocide; violating domestic, international, and humanitarian law; or denying students and teachers a safe educational environment, organizers argued. In 2021, Yale Corporation divested from two major private prison companies, CoreCivic and GEO Group. 

“Military weapons companies develop, manufacture, and sell products used in the commission of war crimes and violations of international law, including the destruction of Palestinian schools, universities, faculty, students, sites of cultural preservation, and whole communities,” the complaint says. “Since these companies are diametrically opposed to the University’s mission, due consideration of Yale’s charitable purposes by a prudent and reasonable fiduciary would bar these companies from investment.”

Drive for Divestment

Students launched protest encampments at Yale last year to call on the school to divest from weapons manufacturers supplying Israel. Last April, Yale’s Advisory Committee on Investor Responsibility, which supports ethical management of the university endowment and reports to university trustees, refused to recommend divestment. 

Yale Police arrested close to 50 protesters as demonstrations escalated in response to news that the university would not divest.

That same month, the advisory committee updated its policies to specify that a prohibition on investment in assault weapons retailers adopted in 2018 applied to assault weapon manufacturers that sell and mass advertise to the general public, but not to military weapons manufacturers. 

University organizers again presented their proposals for divestment to Yale’s advisory committee on in November. Last month, in response to the presentation, the committee declined again to divest from military weapons manufacturers and suppliers in an email to a university organizer. (Yale’s Advisory Committee on Investor Responsibility did not immediately respond to a request for comment.)

“If the complaint alleges that the university has violated its own investment policies or fiduciary duties, or violated a donor restriction, then the state may evaluate whether trustees or investment managers have acted inconsistently with UPMIFA’s prudence and loyalty standards,” said Ellis, the attorney. “However, absent a clear statutory restriction, investments in military contractors or similar industries are generally a matter of policy discretion rather than a legal violation.”

Taran Samarth, a graduate student organizer with the Yale Endowment Justice Collective, which put together Wednesday’s complaint, said the university’s endowment policies showed the Palestine exception in action. 

“Instead of following state law, community voices, and their own investment policies, the trustees have let a Palestine exception to endowment management prevail at Yale,” Samarth said. “Abandoning their own divestment precedent and arresting students en masse isn’t just bad policy by the trustees. It’s bad-faith leadership.”

“The Yale Corporation has breached its fiduciary duties of loyalty and due consideration of the charitable purposes of the institutional fund by providing capital to the military weapons industry,” the complaint says. “Continued investment in military weapons companies violates the Yale Corporation’s duty to consider an asset’s special relationship or special value, if any, to the charitable purposes of the institution.” 

In recent years, there has been some success in getting universities to divest from fossil fuels through a similar strategy. Organizers at Cornell and Harvard filed complaints alleging that their schools’ investments in fossil fuels violated fiduciary duties. In 2019, Cornell issued a moratorium on fossil fuel investments, and in 2021, Harvard said it would end its investments in fossil fuels. That same year, Yale announced it would be “applying its ethical investment policy to the fossil fuel industry.”