SEC’s ESG Taskforce Fines Investment Adviser $1.5 Million for Misstatements Concerning ESG

What happened?

On May 23rd, the Securities and Exchange Commission (SEC) charged BNY Mellon Investment Adviser, Inc. for misstatements and omissions about Environmental, Social, and Governance (ESG) considerations, according to a press release from the SEC. The SEC found that, from July 2018 to September 2021, BNY Mellon represented or implied that all investments in their funds had undergone an ESG review when that was not the case for every investment at the time of initial investment.

Without admitting or denying the SEC’s findings, BNY Mellon Investment Adviser agreed to a cease-and-desist order, a censure, and to pay a $1.5 million penalty. The SEC’s order also noted that BNY Mellon Investment Adviser promptly undertook remedial acts and cooperated with Commission staff in its investigation.

“As this action illustrates, the Commission will hold investment advisers accountable when they do not accurately describe their incorporation of ESG factors into their investment selection process,” said Adam Aderton, Co-Chief of the SEC Enforcement Division’s Asset Management Unit.

The ESG Taskforce, formed in March of 2021, has filed more than a dozen ESG-related enforcement actions, but this is the first action to target an investment adviser. It will continue to analyze disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.

Read the full press release from the SEC: SEC Charges BNY Mellon Investment Adviser for Misstatements and Omissions Concerning ESG Considerations

What does this mean for me?

It is critical for firms to have a solid compliance program to ensure that policies and procedures are followed consistently. Marketing review and ongoing testing of ESG procedures can help your firm survive scrutiny from the ESG Taskforce.

Fairview Investment Services provides full-service compliance support for registered investment advisors by creating and implementing comprehensive, sustainable compliance programs, including ongoing testing and evaluations to ensure firms are remaining compliant with SEC regulations. If your firm requires assistance with understanding and implementing SEC regulations, we can help. Contact us today for more information about our services.

By | 2022-05-24T15:22:55-04:00 May 24th, 2022|Fairview® Flash Reports|

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