Just weeks after getting fined $35 million by the Securities and Exchange Commission for “widespread recordkeeping failures,” Invesco Advisers was fined again by the SEC last week for making misleading statements about the percentage of company-wide assets under management using environmental, social, and governance (ESG) factors in investment decisions.
The Atlanta-based registered investment adviser agreed to pay a $17.5 million civil penalty to settle the SEC’s charges, according to a statement. This so-called “greenwashing” charge comes weeks after the SEC settled with WisdomTree Asset Management for $4 million for falsely advertising the investment strategy of three funds to have incorporated ESG factors.
According to the SEC’s cease-and-desist order, from April 2020 to July 2022, Invesco told clients – and stated in marketing materials – that between 70%-94% of its parent company’s assets under management were “ESG integrated.” However, in reality, these percentages included a substantial amount of assets that were held in passive ETFs that did not consider ESG factors in investment decisions. Furthermore, the SEC’s order found that Invesco “failed to adopt and implement written policies and procedures” defining ESG integration.
“Invesco saw commercial value in claiming that a high percentage of company-wide assets were ESG integrated. But saying it doesn’t make it so,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “Companies should be straightforward with their clients and investors rather than seeking to capitalize on investing trends and buzzwords.”
The order charges Invesco with willfully violating the Investment Advisers Act of 1940. Without admitting or denying the order’s findings, Invesco agreed to cease and desist from violations of the charged provisions, be censured, and pay the aforementioned $17.5 million civil penalty.
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“Invesco failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act,” according to the SEC order.
"We are pleased to resolve this matter related to historical statements made about the percentage of firm-wide assets under management that were ESG-integrated. The SEC Order makes no allegations or findings related to disclosures about specific funds or investment strategies," Invesco said in a statement.