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DWS has agreed to pay a total of $25mn to settle two separate enforcement actions brought by the US securities regulator stemming from investigations into a greenwashing scandal that has dogged the asset manager for more than two years.
The German asset manager, which is majority owned by Deutsche Bank, was charged by the Securities and Exchange Commission for alleged money laundering violations and misstatements linked to its environmental, social and governance investments.
“The SEC’s order finds that DWS advised mutual funds with billions of dollars in assets yet failed to ensure that the funds had an [anti-money laundering] AML program tailored to their specific risks, as required by law,” Gurbir Grewal, director of the regulator’s enforcement division, said in a statement on Monday.
The SEC also accused DWS of making “materially misleading statements” about its controls over ESG factors included in investment and research recommendations for ESG products, including some actively managed mutual funds.
“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,” said Sanjay Wadhwa, deputy director of the SEC’s enforcement division.
DWS agreed to the penalties without admitting or denying the SEC’s findings. The company said it was “pleased” to have resolved the matter, adding that the SEC found no misstatements linked to its financial disclosures or its funds’ prospectuses.
DWS said “the weaknesses identified by the SEC are in relation to processes and procedures that the firm has already taken steps to address”.
This is a developing story
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