The U.S. Securities and Exchange Commission (SEC) on Monday accused an investment adviser of misrepresentations and compliance violations related to the implementation of investment strategies touted as incorporating environmental, social, and governance (ESG) factors. The lawsuit was filed against WisdomTree Asset Management.
Details: WisdomTree invested in fossil fuel and tobacco companies from March 2020 to November 2022 in three ESG market ETFs, according to the SEC order. This contradicted the fund’s prospectus, which said it would not invest money in companies involved in certain products or activities, such as fossil fuels or tobacco.
The order also found that WisdomTree lacked vetting process policies and procedures to remove such companies from the fund.
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“At a fundamental level, federal securities laws enforce a simple proposition: Investment advisers must walk the talk and say what to do,” said Sanjay Wadhwa, acting director of the SEC’s Enforcement Division, in a statement. mentioned in.
“If an investment advisor represents that it adheres to certain investment criteria, whether investing or refraining from investing in companies that engage in a particular activity, it will comply with those criteria and appropriately disclose any limitations or exceptions to those criteria. ” Wadhwa added.
WisdomTree liquidated the fund in February 2024, according to an SEC filing from the company. The three delisted ETFs include WisdomTree International ESG Fund, WisdomTree Emerging Markets Fund, and WisdomTree US ESG Fund.
WisdomTree agreed to pay a $4 million civil penalty without admitting or denying the SEC’s findings.
WisdomTree’s largest fund is WisdomTree Emerging Markets High Dividend Fund DEM, with $2.94 billion in assets under management.
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