Goldman Sachs is facing an investigation by the US Securities and Exchange Commission (SEC) into ESG investments (investments based on environmental, social and corporate governance criteria), according to the Wall Street Journal.
The SEC investigation focuses on Goldman’s asset management arm, according to those familiar with the matter. The agency examines whether certain investments violate the criteria for ESG investments. The investigation is related to two mutual funds of this company.
Authorities in the United States and Europe are investigating how companies promote investment, looking at disclosure omissions and more serious allegations of “green money laundering” or exaggeration of ESG capabilities.
Late last month, police raided the offices of Deutsche Bank and asset manager DWS Group in Frankfurt as part of a “green laundering” investigation. DWS CEO Asoka Woehrmann resigned shortly afterwards, while the company denied the allegations.
The Securities and Exchange Commission has not yet enacted rules to meet ESG investment requirements, so the investigation could focus on whether Goldman’s disclosures to customers did not accurately describe its investment practices, the Wall Street Journal reported.
The SEC has warned fund managers not to mislead investors about the standards and methods they use to classify funds as ESGs. Behind the scenes, the SEC is pressuring financial companies to show that they are keeping their promises.
In the first half of last year, the agency set up a working group of lawyers, which focuses on ESG disclosures, among other things.
Around the same time, the regulator published a report showing that many chapters describing themselves as ESG did not take enough steps to prove that they met the criteria.
Last month, the SEC announced that Bank of New York Mellon had agreed to pay $ 1.5 million to settle SEC claims that it falsely implied that certain funds had undergone ESG quality control.
The researchers found that BNY Mellon’s asset management unit did not always look at the ESGs used to assess mutual funds from July 2018 to last September, despite telling investors that it did.
BNY, which neither acknowledged nor denied the SEC’s allegations, said it had taken steps to improve communication with investors.
Source: Capital
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