UBS Group AG will pay a Texas school district $850,000 after the bank was dropped from underwriting a bond sale because Republicans labeled it unfriendly to the oil industry.
(Bloomberg) — UBS Group AG will pay a Texas school district $850,000 after the bank was dropped from underwriting a bond sale because Republicans labeled it unfriendly to the oil industry.
The settlement reflects the costs for the Normangee Independent School District to redo the sale without UBS, Texas Attorney General Ken Paxton said in a statement Friday announcing the deal. Paxton negotiated the settlement on behalf of the district.
“UBS’s actions in this case were costly, and it is critical that they compensate Normangee ISD to recover losses,” Paxton said in the statement.
A message left with Normangee ISD was not immediately returned.
Related: Texas School Asks UBS for Refund After Energy Boycotter Label
The district had to resell $18 million of bonds that had already been underwritten by UBS Financial Services in September, a month after the bank’s parent company was added to the state comptroller’s list of firms that restrict business with the oil and gas industry, and are therefore ineligible for large contracts with the state and other government entities.
The list was the result of a Republican-sponsored law, Senate Bill 13, that passed in 2021 and targets companies that have policies Texas sees as damaging to its fossil-fuel industries.
Under that law, companies must verify that they don’t engage in what the legislation describes as “boycotts” of the oil and natural gas industries if they want to work with state and local municipalities.
UBS had said the bank was in compliance when the initial deal sold in early August. But before the transaction closed, the comptroller placed UBS on its boycott list. That meant the bonds had to be re-auctioned several weeks later.
“UBS recognized the challenging circumstances in which Normangee ISD was placed and is pleased to support the school district following its bond reissuance,” Erica Chase, a spokesperson for UBS, said in an email. “UBS does not boycott the energy industry, as we actively work with energy companies on an ongoing basis.”
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