As indicated above, Dow Jones has been a publicly-traded company. News Corporation, the company which recently acquired Dow Jones, is also a publicly-traded company. After a careful review of all of the Dow Jones filings with the SEC and the filings by News Corporation relating to its acquisition of Dow Jones, there is absolutely no mention of any reputational, financial, or national security risks associated with operating a Shariah-compliant index. No mention is made of the purposes of Shariah and its methodologies beyond describing the “objective filter” or “screen” used to develop the DJII. No mention is made of the fact that one of its key Shariah authorities has called for violent Jihad against non-Muslims in the U.S. — even during peaceful times where Muslims are provided with the First Amendment right to freely exercise their religion and to convert non-Muslims through lawful means. The question regarding all of the disclosure and due diligence issues raised in this memorandum now confront not simply the Dow Jones’ lawyers, who appear to view Shariah as a beneficent black box, but the News Corporation lawyers.
Without going into an intricate analysis of all of the Dow Jones representations and disclosures relating to Shariah and SCF, one area is of interest because it confirms the earlier analysis of the intimate and integrated relationship between SCF, Shariah, and the Law of Jihad. The DJII describes its “screens” as of two kinds. One screen is for the forbidden “vice” industries such that companies engaged in any of the forbidden industries will be excluded from the universe of potential indexed companies. The second-level screen eliminates companies from within the permissible industries whose financials indicate they carry too much debt or maintain too much liquidity which would suggest they are paying or receiving, respectively, too much interest. (As indicated earlier, a minimum amount of interest is permitted but the Shariah-compliant mutual fund or the individual Shariah-compliant investor must “purify” the portion attributed to forbidden profits such as from interest and donate that portion to a Shariah-compliant charity.)
In its various public representations, Dow Jones states that the following industries are forbidden and excluded from the DJII: “alcohol, tobacco, pork-related products, financial services, defense/weapons and entertainment.” Elswhere, Dow Jones explains that neither tobacco nor defense/weapons are strictly forbidden:
Although no universal consensus exists among contemporary Shari’ah scholars on the prohibition of tobacco companies and the defense industry, most Shari`ah boards have advised against investment in companies involved in these activities.
The question for the U.S.publicly-traded company is: Does it have a duty to disclose why it is that Shariah would prohibit the defense industry? Does the Shariah prohibition apply to Muslims investing in a Muslim defense industry? There is of course no legal issue relative to an index or a mutual fund which chooses not to invest in military or defense industries, whether out of a conviction that such industries are sources of evil or out of a moral position against war of any kind. The question, in this instance, however, does not arise in a vacuum but in a setting flowing from the black box of Shariah. That black box, once pried open, exposes a hostile and even violent doctrine targeting non-Muslims in the West for conversion, subjugation, or war. There are literal armies of Shariah-driven combatants at war with the West based upon that doctrine. It is in this context that the question about the motives for the prohibition becomes material to a post-9/11U.S. investor in the context of disclosure laws.