By Chris Prentice
NEW YORK (Reuters) -Deutsche Bank-controlled investment firm DWS will pay $25 million to settle charges over misstatements regarding its environmental, social, and governance (ESG) investing and failures in policies designed to prevent money laundering, U.S. regulators said on Monday.
DWS Investment Management Americas made “concerning” misstatements regarding its ESG investment process, the U.S. Securities and Exchange Commission (SEC) said in a statement.
The firm marketed itself as a leader in ESG investing, but from August 2018 until late 2021, failed to implement certain related policies as they were billed to investors, the regulator said.
Separately, the SEC found DWS failed to develop a mutual fund anti-money laundering program as required by law. The firm did not have systems in place that were “reasonably designed” to flag potential money laundering, the agency said in a separate order.
DWS did not admit or deny the SEC’s findings. A spokesperson said the firm is pleased to have resolved the matters, noting DWS stands by ESG statements made in its financial disclosures and fund prospectuses and has already taken steps to address weaknesses.
Reuters in July reported that the SEC was preparing to slap DWS with a fine after a two-year probe into allegations of “greenwashing”.
Regulators in Germany have also been investigating accusations sparked by a whistleblower that DWS may have misled investors by marketing its funds as greener than they actually were.
Under Democratic leadership, the SEC has pledged to crack down on the inflating of ESG credentials to attract investors. Last year it hit Goldman Sachs and BNY Mellon with $4-million and $1.5-million fines, respectively.
(Reporting by Chris Prentice; Editing by Chizu Nomiyama and Emelia Sithole-Matarise)
