Deutsche Bank’s DWS to Pay $25 Million to Settle SEC Probes
F1online digitale Bildagentur GmbH / Alamy Stock Photo News>Industry Deutsche Bank’s DWS to Pay $25 Million to Settle SEC Probes DWS has been under scrutiny by various agencies including the SEC since a former employee went public over two years ago with cliams that the asset manager had inflated its ESG credentials. (Bloomberg) -- Deutsche Bank AG’s DWS asset management arm agreed to pay a total of $25 million to settle Securities and Exchange Commission probes into alleged greenwashing and anti-money laundering lapses.
The penalties include $19 million for “materially misleading statements” about how it incorporates environmental, social, and governance factors into research and investment recommendations and $6 million for failing to develop a mutual fund AML program, the SEC said in a statement on Monday. DWS didn’t admit or deny the SEC’s findings.
DWS has been under scrutiny by various agencies including the SEC since a former employee, Desiree Fixler, went public over two years ago with claims that the asset manager had inflated its ESG credentials. The allegations and ensuing probes hit the firm’s share price as investors sought to assess the financial impact.
“Investment advisers must ensure that their actions conform to their words,” Sanjay Wadhwa, deputy director of the SEC’s enforcement division, said in the statement on Monday. “DWS advertised that ESG was in its ‘DNA,’ but, as the SEC’s order finds, its investment professionals failed to follow the ESG investment processes that it marketed.”
DWS shares briefly gained on the news but were trading 0.43% lower as of 3:26 pm local time.
A spokesman for DWS said the firm is “pleased that the SEC recognized our cooperation in the investigation and our remediation efforts.” The ESG order found “no misstatements in relation to our financial disclosures or in the prospectuses of our funds.”
“The order also makes clear that there was no intent to defraud, and the weaknesses identified by the SEC are in relation to processes and procedures that the firm has already taken steps to address,” the spokesman said.
DWS has rejected Fixler’s claims from the outset and Chief Executive Officer Stefan Hoops has said he stands behind the disclosures targeted in the probes. He has also said that some of the firm’s past marketing claims may have been “exuberant.”
DWS said in July that it had made €27 million ($28.7 million) of “other” provisions in its second-quarter results. The vast majority of that was for expected settlements from several probes in the US and Germany, a person familiar with the matter said at the time.
The settlement is the biggest fine that the SEC has extracted thus far in its push under Chair Gary Gensler to crack down on how asset managers label ESG funds.
Goldman Sachs Group Inc. agreed to pay $4 million to settle claims last November that its asset-management unit didn’t properly weigh ESG factors in some of its investment products. A Bank of New York Mellon Corp. arm agreed to pay $1.5 million to settle allegations in May 2022 that it falsely implied some mutual funds had undergone an ESG quality review.
On the policy front, last week, the Wall Street regulator also imposed the most sweeping overhaul for fund-labeling regulations in more than two decades. The backers of the overhaul say the measures in particular will help rein in overblown claims about ESG investments.
--With assistance from Ben Bain.
© 2023 Bloomberg L.P.
0 comments Hide comments
Comment * Switch to plain text editorMore information about text formats
Text format CommentsPlain text Comments- Allowed HTML tags: <em> <strong> <blockquote> <br> <p>
- No HTML tags allowed.
- Web page addresses and e-mail addresses turn into links automatically.
- Lines and paragraphs break automatically.
- Load More
- Next Article
Owl Media Group takes pride in providing social-first platforms which equally benefit and facilitate engagement between businesses and consumers and creating much-needed balance to make conducting business, easier, safer, faster and better. The vision behind every platform in the Owl Media suite is to make lives better and foster a healthy environment in which parties can conduct business efficiently. Facilitating free and fair business relationships is crucial for any thriving economy and Owl Media bridges the gap and open doors for transparent and successful transacting. No advertising funds influence the functionality of our media platforms because we value authenticity and never compromise on quality no matter how lucrative the offers from advertisers may seem.
Originally posted on: https://www.wealthmanagement.com/industry/deutsche-bank-s-dws-pay-25-million-settle-sec-probes