WASHINGTON (Reuters) -New York-based investment adviser WisdomTree Asset Management agreed to pay $4 million to settle Securities and Exchange Commission (SEC) charges it misleadingly marketed three funds as having an environmental, social, and governance (ESG) investment strategy.
WHY IT’S IMPORTANT
The order is another example of the SEC cracking down on so-called “greenwashing,” whereby investment managers – in a bid to attract cash – market funds as having ESG investment strategies even though they may actually invest in fossil fuel or other types of companies they claim to screen out.
CONTEXT
*From March 2020 until November 2022, WisdomTree said three exchange-traded funds did not invest in fossil fuel and tobacco companies, but the SEC found the funds in fact invested in companies that were involved in coal mining and transportation, natural gas extraction and distribution, and retail sales of tobacco products.
*WisdomTree used data from third-party vendors that did not screen out all companies involved in fossil fuel and tobacco-related activities, the SEC found. It added that did not have any policies and procedures to ensure the screening process excluded such companies.
*WisdomTree agreed to a cease-and-desist order and censure and to pay a $4 million civil penalty, without admitting or denying the SEC’s findings.
*A WisdomTree spokesperson said the funds concerned were very small and have since been liquidated. “We take our regulatory and compliance responsibilities very seriously. We are proud of our investment track record and our transparency with investors,” the spokesperson added.
(Reporting by Michelle Price; additional reporting by Suzanne McGeeEditing by Chris Reese and Aurora Ellis)